기업의 투자기회가 재량적 발생액으로 측정된 이익의 질에 미치는 영향 : 대형회계법인의 역할을 중심으로

[Purpose] The purpose of this study is to investigate the relationship between investment opportunities and big 4 auditors, and whether the relationship results in a lower likelihood of earnings management. [Methodology] To investigate the research purposes, I use KOSPI and KOSDAQ firms during the period from 2013 to 2020. This study empirically tested hypotheses by measuring investment opportunities and earnings management following methods suggested by prior literature. [Findings] Empirical evidence suggests that firms with higher investment opportunities are more likely to choose big 4 accounting firms as their auditor. Further, firms' investment opportunities are positively associated with earnings management, but the association is weakened by the big 4 auditors. Additional analysis suggests that the cost of debt in year t＋1 is positively associated with the investment opportunity set, but the association is weakened by hiring big 4 auditors. [Implications] This study provides additional empirical evidence of investment opportunity literature from Korea incorporating accounting issues. Also, this study provides the practical implication for investors and governing bodies that firms' investment opportunities are associated with earnings management. Further, empirical evidence suggests that it is important to consider the investment opportunities when capital market participants assess or set legislation of mandatory auditor designation regulation for firms with high investment opportunities. Empirical evidence gathered with the additional analysis provides the economic benefit of hiring big 4 auditors for firms with high investment opportunities.