적자회피를 위한 재량적 발생액 및 실제 이익조정 활동: 유가증권상장과 코스닥상장기업에 대한 실증적 증거

This paper investigates whether KOSPI and KOSDAQ listed firms that show small positive earnings use accrual-based earnings management and/or real earnings management to avoid losses. Furthermore, this paper examines whether KOSPI and KOSDAQ listed firms prefer to use accrual-based earnings management or real earnings management. According to Burgstahler and Dichev (1997), we classify firms that show small positive earnings on the basis whether they avoid losses by a narrow margin because such small beaters are suspected of managerial intervention by earnings management. After Burgstahler and Dichev (1997), most studies observe firms that meet or slightly beat zero earnings threshold to indirectly examine whether managers manage their earnings through accrual-based or real earnings management. However, it is difficult to conclude that firms with small positive earnings always use accrual-based and/or real manage earnings to achieve earnings benchmark. Out of firms which belong to the unusually high frequencies of small positive earnings, some firms might turn small losses into small profits with better operating results for a year. Therefore, our study is differentiated with prior studies in that we examine whether managers’ behavior to use accrual-based earnings management or real earnings management affect the probability to include the small positive earnings interval. Managers who know their business status better than anyone else might select accrual-based earnings management and /or real earnings management. Accordingly, the managers’ behavior to use earnings management causes firms to include the small positive earnings interval. Following Burgstahler and Dichev (1997), we find unusually high frequencies of small positive earnings in cross-sectional distribution of earnings level and define as suspected firms whose managers might manage their earning. In order to measure accrual-based earnings management, we estimate discretionary accruals by using the performance matched model by Kothari et al. (2005). Similar to Roychowdhury (2006), we estimate abnormal cash flow from operations, abnormal production costs, and abnormal discretionary expenditures to measure real earnings management. Our observations are based on 5,132 firm-year data, selected from KOSPI listed firms and 5,498 firm-year data, selected from KOSDAQ listed firms for eleven years (2000 to 2010). The empirical findings of this paper are following. First, we find the suspected firms listed in a KOSPI and KOSDAQ market, which show small positive earnings, manage their earnings to avoid losses not only by real earnings management but also by accrual-based earnings management. Our results are same even after we control a certain variable that might affect the dependent variables. Second, we find that the suspected KOSPI firms whose managers might manage their earnings to avoid losses prefer to use real earnings management, rather than to use accrualbased earnings management. On the other hand, we find that the suspected KOSDAQ firms whose managers might manage their earnings to avoid losses prefer to use accrual-based earnings management, rather than to use real earnings management. We find the consistent results after we redefine the suspected interval by a narrow or wide section. Finally, the results of our study suggest that firms listed in both KOSPI and KOSDAQ tend to avoid losses by using not only real earnings management but also accrual-based earnings management. Thus, our results are different from previous studies such as Lee and Sohn (2007) and Park and Yoon (2008), showing that a sample reporting profit close to zero does not show higher discretionary accruals than other groups. Our findings imply that managers in KOSPI and KOSDAQ market consider zero earnings threshold as an important earnings goal to achieve in that managers try to use both accrual-based earnings management and real earnings management. Our paper contributes to a literature on earnings management, in that KOSPI listed firms and KOSDAQ listed firms have different incentives to choose earnings management methods to meet earnings goals. Our findings that KOSPI firms with small positive earnings prefer to use real earnings management to avoid losses, imply that managers focus on their short-term achievement rather than on activities to increase firm value in a long-term perspective. Therefore, our findings provide an important implications to not only academic researchers but also investors, practitioners, accounting standard setters, and regulators who are interested in managers’ earnings management behaviors. Also, academics can also apply the discussion in this paper for related researches.