코스닥시장에서의 상장폐지위험과 이익조정

Recently, designation as an administrative issue and delisting decision drew a lot of attention due to some embezzlement scandals. Administrative issue and substantial examination for delisting(called qualitative delisting examination) have been adopted to protect investors, however, at the same time, these decisions have been criticized for impairing the interests of the current shareholders. It has been debated over the legitimacy of these decisions, and there is a demand to overhaul this system. The purpose of this study is to investigate the relationship between the high probability of delisting and earnings management for the firms listed in the KOSDAQ market. This study empirically examines whether the firms with a higher risk of delisting have a higher tendency of manipulating earnings upward to escape the delisting decision. This study uses the earnings management measure(AEM and REM) as a dependent variable and the delisting risk(DR) as an independent variable. According to earnings management literatures, firms use real activities (e.g., increasing price discounts or alleviating credit terms, reporting lower cost of goods sold through increasing of production, reducing discretionary expenditures) and accruals at the same time in order to manage reported earnings in practice. Moreover, managers tend to prefer real earnings management rather than accrual earnings management to maintain accounting appearances for the firms with higher limitations of the ability of accrual earnings management and higher possibility of being detected by auditor or regulatory scrutiny. Therefore, both accrual earnings management and real earnings management are used in this study to measure earnings management behavior of firms with higher propensity of delisting risk. Accrual-based earnings management(AEM) was measured by discretionary accruals drawn from the performance-matched modified Jones model in Kothari et al. (2005), and real earnings management(REM) were measured by abnormal cash flow from operations, abnormal production costs, and abnormal discretionary selling and administrative expenses suggested by Roychowdhury(2006). Delisting risk variable(DR) is a dummy variable indicating 1 for a firm has a high risk of delisting by the KOSDAQ market listing regulation in t+1 year and 0 for a firm has not. The firms with designating as administrative issues, relating to the substantial examination for delisting, and delisted by either the quantitative delisting criteria or the immediate delisting criteria were chosen in this study as the firms with high risk of delisting(DR=1). Firm size, debt-to-assets ratio, sales growth rate, reporting the weakness of the internal accounting control system, manufacturing dummy, and blockholder's ownership are used to control variables in the research model. Research was conducted during the period of 2006-2010. Total of 298 KOSDAQ samples(non-financial industries) were selected and it consists of 136 firms with a high probability of delisting and 162 firms with control. The empirical results of this study revealed that firms with a higher propensity of being delisted tend to manipulate earnings to avoid the delisting. Especially, the study also found out that firms with a high risk of delisting tend to use real earnings management while accrual manipulation is more likely to be caught. In conclusion, this empirical findings would provide implications for policy maker to improve and revise regulations and substantial examination regarding delisting decisions.