파생증권 발행으로 인한 이해관계자 확대가 회계의 보수성 증가를 초래하는가?: ELS연계기업을 중심으로

Since the issue of Equity linked security(ELS) was legally allowed in 2004, Korean equity linked security market has been rapidly growing due to the relatively low interest rate in the financial circumstance. If the firm's stock price is linked with ELS, the range of the interested parties is extended including the investors and the issuers of ELS and the new comers of the interested parties will help to reduce the information asymmetry between firms and investors and increase the efficiency of the financial market. In terms of firms' managers, the new-added number of watch dogs on the firms' financial statement will increase the possibility of litigation, which would drive the firms' managers to takce the posture of the accounting conservatism. If the stock price dropped sharply, the value of ELS would also plummet. To prevent the ELS investors' loss in th future, firms will try to inform the investors of any possible loss as soon as possible by recognizing any probable losses in financial statement when the bad news or the economic loss incurred. The early recognition of loss will prevent the big bath in accounting which would result in stock price crash meaning much loss for ELS investors. With the reason, we assumed that the firms linked with ELS would report the financial statements in more conservative ways. For empirical analyses, this study hand-collects the data of firms with ELS from Korean Securities Depository from 2006 when the firm' stock linked ELS was initially issued to 2014. We analyzed the accounting conservatism of the firms with ELS using 368 firm-year samples of the firms with ELS and 15,245 control samples. We measure accounting conservatism by using C-ScoreKW of Khan and Watts(2009) model and C-ScorePZ and Q-ScorePZ of Penman and Zhang(2002) model. Prior to the study of the relationship analysis between firms with ELS and accounting conservatism of the firms, we considered the endogenous problem between the two and self-selection bias problem. To solve the problem we adopted the two stage treatment effect model introduced by Heckman(1979) and Maddala(1983). In the model, we used negative conditional skewness, down-to-up volatility, market value and the stock price return of the previous year as the instrument variables which affect on the choice of ELS firms In the main analysis, we found that three conservatism proxies(C-ScoreKW, C-ScorePZ and Q-ScorePZ) of the firms with ELS are significantly higher than those of the firms without ELS. This result suggests that when ELS is issued, the firms' managers will be more conservative because they try to cope with the increased possibility of litigation and to prevent possible loss of ELS　investors. Another assumption is that the more issued of ELS the firms are, the more conservative in the accounting because with the increase of the issue of ELS, the interest party will enlarge and the firms' managers get more pressure for the future litigation aroused by any possible accounting scandal and earning management. Prior to the study we adopted two sls regression to solve endogenous problem between the times of ELS issue and the accounting conservatism. And we also used three accounting conservatism; C-ScoreKW of Khan and Watts(2009) model and C-ScorePZ and Q-ScorePZ of Penman and Zhang(2002) model. Our study on the 2nd assumption shows that the firms' accounting conservatism increased with the times of issuing ELS in the year. We interpret the managers are more cautious on reporting the financial statements when they have the more interest parties which means the more watch dogs are monitoring the financial statements. Jennings and Starks(1986) showed the derivatives securities increase the transparency of market and Watts(2003, 2008) supported the accounting conservatism is one of the instruments to reduce the information asymmetry between the firms and the investors. Our findings suggest that firms reflect the extended range of the interested parties like the ELS issuers and the ELS　investors while reporting financial statement, which prevent the possible loss of the ELS investors. And the conservative attitude of the firms' manager would be beneficial to the ELS investor as well as the stock investors. Our findings also suggest that the firms with　the derivatives increase transparency through accounting conservatism because the stock investors and ELS investors can be aware of the firms economic loss early which indicates that equity linked security will work positively for the market transparency in Korea. Our study is the first analysis on the relations between the derivatives and accounting conservatism. And we recommend these kinds of new environments be considered when we study accounting conservatism and other accounting characteristics. And further studies can be investigated on the relations between the derivatives and other accounting variables like earning response coefficients, capital costs or the relations between the derivatives and financial market factors like returns, trading volumes and volatility.