생산조업도 수준과 이익조정의 관계: 발생액 이익조정과 실물이익조정

This study investigates the relationship between the production volume level and earnings management. Specifically, it investigates the nonlinear relationship between the production volume level and two methods of earnings management, accrual earnings management and real earnings management, and also traces the range of the production volume, i.e. the inflection point, where the slope of earnings management changes in the nonlinear relationship, to identify alternative relationships between earnings management methods according to the production volume level. Earnings management to achieve corporate(or managers) objectives can be divided into accrual earnings management (Kothari et al. 2005) and real earnings management (Roychowdhury 2006). Accordingly, Zang (2012) argued that firms will determine the priority of earnings management methods according to the cost of the earnings management method. This simultaneously suggests that there is an “substitutional relationship” between the two methods of earnings management (accrual earnings management and real earnings management) that firms choose. Accordingly, this study presents the following empirical analysis results. Accrual earnings management and abnormal operating cash flow were shown to have a nonlinear, convex quadratic relationship with the level of production volume. On the other hand, abnormal production costs and abnormal discretionary expenditures were shown to have a nonlinear, concave quadratic relationship with the level of production volume. In addition, the inflection points of the two opposing nonlinear relationships both appeared at the level of 80% of production capacity, providing empirical results that accrual earnings management and real earnings management are substitutional relationships depending on the level of production volume.