방산 계약방법이 이익조정에 미치는 영향

The purpose of this study is to show whether companies raise or lower reported cost in accordance with the defense acquisition contract procedures, which has been recognized as an important factor in reducing national budget, thereby raising or lowering profits. In order to achieve these objectives we have conducted hypothesis testing on a sample of 640 firm－year data from companies that have records of signing a procurement contract with Defense Acquisition Program Administration from the year of 2000 to the year of 2012. The result shows that companies with many procurement by negotiation tended to raise their reported cost. Firms under procurement by negotiation are ensured exclusive rights and, by raising cost and subsequently the estimated budget, they expect to obtain more profit. Secondly, firms with many fixed－price contracts also tended to report higher cost. We conclude that firms raise reported cost in order to prevent future contract price decrease and to ensure long－term profitability. This is because the expected pre－arranged price is derived after considering past costs and contract prices. This study has shown that earnings management differs among defense industry firms according to the different acquisition contract types being used. This study is also significant in that it uses the total costs from ‘defense materiel ratio report’ as a measurement for earnings management.