4분기 경영자의 이익조정이 연차이익의 정보유용성에 미치는 영향

The purposes of this study are to verify whether the information usefulness of annual earnings vary depending on the manager's incentives to manage earnings during the fourth quarter and a review system of quarterly financial statements magnifies this association. This study tests a sample of 3,482 firms traded on the KOSPI market during the 2007-2012 periods. The results of this study are summarized as follows. First, it appears that the information usefulness of the earnings level as well as the earnings change vary depending on the manager's incentives to manage earnings during the fourth quarter. In particular, the usefulness of earnings information is higher for the firms suspected of managing earnings to smooth quarterly earnings than to avoid loss (earnings decrease or a shortfall of earnings forecasts). Thus, the market participants are likely to consider not only annual earnings but also the quality of quarterly earnings in their value assessment process. Second, it presents that the review system of quarterly reports is likely to enhance the usefulness of earnings information. However, the effect of this system on the association between the manager's incentives to manage earnings during the fourth quarter and the usefulness of earnings information is so weakly significant. In summary, the market participants are likely to confirm the quality of quarterly earnings by the manager's incentives to manage earnings during the fourth quarter and thus differently asses the usefulness of annual earnings by the quality of quarterly earnings. This result also will make the managers recognize the importance of the persistence of quarterly earnings. In spite of the useful results above, this study have the limitations that can not directly find evidence on whether the managers manage earnings and do not cover earnings management in the prior quarters.