타인자본에 의존하는 중소기업의 이익조정에 대한 ESG활동의 조절효과

Firms have an incentive to manage earnings to avoid economic pressures such as early debt repayment and increased cost of capital in the event of a debt contract breach. On the other hand, companies with excellent ESG practices may be motivated to enhance accounting transparency from ethical perspectives, and an institutional environment exists to control earnings management through excellent corporate governance. Therefore, earnings management practices may be decreased if firms with high debt ratios engage in superior ESG practices. Domestic SMEs rely primarily on debt for capital financing. Hence, earnings management practices could also be suppressed. This study examined whether earnings management is adjusted according to the ESG activities in small and medium-sized enterprises with high debt ratios. This study used discretionary accruals and a combined measure of real earnings management as the dependent variables to measure earnings management. Furthermore, the interaction variable between ESG activities and the debt ratio was included as an independent variable to analyze whether ESG activities moderate the relationship between the debt ratio and earnings management. In addition, an analysis was conducted using abnormal operating cash flow, abnormal production costs, and abnormal selling and administrative expenses as dependent variables, which are measures of each type of real earnings management. This study empirically showed that companies with higher debt ratios exhibited significantly lower discretionary accruals and real earnings management, as well as significantly lower overproduction, when their ESG activities were more robust. That is, excellent ESG activities were found to suppress earnings management in companies with high debt ratios. This study suggests that ESG activities can positively contribute to earnings management for debt contract fulfillment in highly indebted SMEs. This study suggests that when evaluating SMEs with high debt ratios during the financial planning stage, investors should consider the impact of non-financial information, such as ESG factors, on the transparency of earnings information, rather than relying solely on accounting earnings figures. This study is significant because it provides empirical evidence for measures to mitigate information asymmetry when financial consumers consider investing in SMEs.