횡령 및 배임 발생 공시가 회계적 보수성에 미치는 영향

The embezzlement of assets or funds or malpractice within large companies listed on the Korea Stock Exchange (hereinafter referred to as “fraudulent behavior” in this abstract) has been widespread and of concern. The embezzlement of assets or funds or malpractice perpetrated by managers can be classified as one of agency problems arising from managers’ private interests. Given the negative effects associated with embezzlement or malpractice such as de-listing, monetary penalty, degrade of credit rating and impairment of corporate reputation, evidence of the effective mechanisms to reduce its occurrence would give firms with the ability to improve their financial performance. Prior researches focused on corporate governance mechanisms such as outsider auditors’ efforts, composition of audit committee, etc. as the effective mechanisms to reduce its occurrence. However, this paper goes further and focuses on accounting conservatism as one of the effective mechanisms to reduce its occurrence. If the level of fraudulent behavior from the occurrence of embezzlement or malpractice becomes even severe, investors may have more concerns about the information risk due to the higher information asymmetry and may ask more conservative accounting. According to LaFond and Watts(2008), the investors' stronger demand for accounting conservatism under the situation of higher level of information asymmetry is accepted by the management. In response to the investors’ increasing request, the firms disclosing fraudulent behavior and having higher ratio of the disclosed amount of embezzlement or malpractice scaled by the shareholders equity are to select more conservative accounting in order to reduce the information risks. Thus, we hypothesize that if the ratio of the amount of disclosed fraudulent behaviors to shareholders’ equity in a firm is higher, then the level of accounting conservatism from the investor’s aspect would be increased (Hypothesis I). Next, we also investigate whether the relation between the ratio and the level of accounting conservatism varies with a Korean specific governance mechanisms(i.e., Chaebol). Due to the controlling shareholder’s discretion to evaluate and transfer the managers inside the Chaebol firms (McNeil et al. 2004), the room of each firm level’s manager may be reduced and the conflict between the shareholders and manager may be suppressed (Kim et al. 2012). The managers under higher surveillance and control by the controlling shareholders within the Chaebol firms tend not to make a decision only to pursue their opportunistic private interests such as embezzlement or malpractice. Accordingly, we hypothesize that the positive (+) relation between the ratio of fraudulent behaviors and the level of accounting conservatism will be less pronounced for the firms belonging to Chaebol group (Hypothesis II). To address our research questions, we used the sample consisting of non-banking 462 firm-years with December fiscal year-end listed on the Korean Stock Exchange for 2006-2014. The sample consists of 77 firm-years disclosing ‘embezzlement’ or ‘malpractice’, which are hand-collected from DART system (Financial Supervisary Service) and KIND system (Korea Stock Exchange) and 365 matching firm-years. We also used four alternative accounting conservatism measures (C_SCORE and ACC for conditional conservatism measures designed by Khan and Watts(2009) and Ball and Shivakumar(2006), respectively; and Con_PZ and Con_ACC for unconditional conservatism measures designed by Penman and Zhang(2002) and Ahmed et al.(2002), respectively). From the test of Hypothesis 1, we find that the level of accounting conservatism is significantly higher with the firms having the higher ratio of the amount of disclosed fraudulent behaviors to shareholders’ equity, indicating that any firm with higher level of fraudulent behaviors is more likely to accept the higher demand for the accounting conservatism. This result implies that, for the firm disclosing higher level of ‘embezzlement’ or ‘malpractice’, the investors may recognize higher information risk and demand more level of accounting conservatism to control the managers’ opportunistic private activities and improve the transparency of the accounting information. From test of Hypothesis 2, we also find that the positive (+) association between the ratio of a firm’s fraudulent behaviors and the level of accounting conservatism is much less pronounced for the firms belonging to Chaebol group. It can be interpreted in a way that the role of Chaebol is effectively monitoring and controlling and monitoring the managers inside the group and preventing them to conduct aggressive fraudulent behaviors. This result may be interpreted that Korean Chaebol firms are seemingly associated with various interest related parties such as institutional investors and foreign investors and the unique ownership structure of Chaebol system suppresses managers’ empire building incentives. This paper has a great significance in that it provides empirical evidence that, on top of other corporate governance mechanisms such as outsider auditors’ efforts, accounting conservatism could be used as the effective mechanisms to reduce the occurrence of ‘embezzlement’ or ‘malpractice’ which is the managers’ opportunistic private activities. Our study is also distinct since this study is for the firms which are affected by the Korean specific governance system (i.e., Chaebol) and provides empirical evidence that the level of accounting conservatism of Chaebol firms is lower than that of non-Chaebol firms indicating that the role of Chaebol is effectively monitoring and controlling the management’ aggressive private incentives.