기업지배구조의 역할: 자본조달 전 이익조정을 중심으로

This study aims to verify the effect of corporate governance on the relationship between capital financing and earnings management. It is known that companies are motivated to increase earnings before capital financing. Increased earnings are to facilitate capital financing itself and may lower the cost of capital and it works favorably to the wealth of existing shareholders. Therefore, companies would try to manage earnings upward before capital financing. Meanwhile, earnings management behavior before capital financing of companies can show different patterns depending on the corporate governance of the companies. Good corporate governance may serve to inhibit earnings management. It is expected to reduce increasing earnings before capital financing of companies under good corporate governance. Samples of this research are non-financial companies listed on the Korea Exchange (KOSPI) between 2006 and 2014. Capital financing of the companies is measured by whether the companies issued equity or bonds and earnings management is measured using performance matched discretionary accruals by Kothari, Leone, and Wasley (2005). In the previous studies, discretionary accruals measured by Modified Jones Model (Dechow, Sloan, & Sweeney, 1995) were usually used, however, for the large growth companies and the companies that show extreme performances, using it causes errors (Kothari et al., 2005; Ball & Shivakumar, 2008). Companies to raise capital may have a greater probability of large growth and extreme performance. This study uses the corporate governance score provided by Korea Corporate Governance Service to measure corporate governance. Corporate governance score consists of shareholder rights, board of directors, disclosure, audit committee, and dividend payments. In addition, this study analyzes corporate governance total score. The results showed that companies increase earnings before capital financing in general, however, companies under good corporate governance less likely increase earnings before capital financing. In the five items excluding dividend payments score were statistically significant. These results show that good corporate governance should mitigate opportunistic earnings management of managers. This paper is significant that it verified the role of corporate governance in the relationship between capital financing and earnings management of the companies expanding previous studies that used discretionary accruals to analyze earnings management before capital financing. In the most of prior studies, such as foreign ownership ratio, audit committee, outside directors ratio have been used as a proxy of corporate governance. Moreover, this study is distinctive since it used the original score of corporate governance provided by Korea Corporate Governance Service for the analysis. In practice, it needs more conservative approach for valuation, credit rating, investment, and external audit for the companies with poor corporate governance considering that they are more likely increase earnings when before raising capital.