임계이익과 영역별 이익조정행태

This is a study on the earnings thresholds of companies listed in Korean stock market. Specifically, we conduct an empirical investigation on the frequency and size of earnings management for achieving positive earnings. We use an approach which is different from the one that has been taken to detect earnings management on earnings distribution in the prior studies. Earlier studies judged earnings management in terms of whether kink was found in the small intervals just around earnings thresholds. However, some recent studies have drawn a conclusion that the kink-approach is getting weaker in its power to detect earnings management. We classify earnings management into six types and compare the frequency and size of earnings management of each type. The classification criterions are pre-managed earnings, the direction of earnings management, and post-earnings management. Our concern is typeⅡ, which consists of sample that pre-managed earnings are negative but post-managed earnings are positive through upward earnings management. We see the typeⅡ as earnings management for avoiding negative earnings and compare with the rest types. As the results, the frequency of typeⅡ is much lower than that of typeⅢ or typeⅥ, indicating that firms conduct further earnings management above zero earnings. However, we find out that the size of earnings management for avoiding negative earnings(typeⅡ) is much bigger than that of other types. This means that achieving positive earnings needs more earnings management.