회계투명성의 국가 간 비교 및 자본비용과의 상관관계에 대한 실증연구: 우리나라를 중심으로

Abstract

Despite all the efforts from practitioners, regulators, and accounting scholars in Korea, accounting transparency in Korea has been ranked at the lowest according to the previous management surveys by International Institute for Management Development (IMD) and World Economic Forum (WEF). In this paper, we question about the validity of those surveys because they might reflect merely biased perception of respondents on accounting practices in Korea. To address this question, we employ empirical proxies for accounting transparency and analyze a large set of archival data on financial statements of firms from 56 countries surrounding IMD survey respondents. We find that Korea does not appear to be in the most opaque group based on several empirical proxies for earnings quality. Specifically, Korea is ranked 1) at the 22nd in terms of the level discretionary accruals among 56 data-available countries, 2) at the 8th in terms of discretionary accruals volatility (standard deviation) among 55 data-available countries, and 3) at the 19th in terms of earnings-returns relations among 51 data-available countries. Furthermore, we do not find evidence that investors rely on information of industry peers in earnings valuation, indicating that the lack of firm-specific private information is not severe in the Korean stock market. In sum, we do not find evidence supporting that accounting transparency in Korea deserves the lowest ranking around the world. Rather, the empirical proxies for earnings quality consistently prove that the de facto quality of accounting transparency in Korea is above the median of the sample countries, consistent with what academicians and practitioners have argued for the last few years. However, further analyses reveal that costs of raising debt (or equity) are not related to the transparency constructs we used above for Korean firms, implying the lack of benefits of improving accounting transparency in Korea. By contrast, the transparency constructs show a strongly negative association with costs of debt (or equity) for U.S. firms, indicating that more transparent firms are well compensated by lower financing costs in the U.S. financial market. We thus suspect that the lack of benefits for accounting transparency in Korea (i.e., statistically no association between earnings quality and external financing costs) would partially provoke the unfavorable responses to survey questions about accounting practices in Korea. If a financial market does not appropriately appreciate the quality of earnings across firms and thus fails to reflect it in capital resource allocation, managers would consider all the regulatory inputs to improve accounting transparency as unnecessary cost sources that are not properly accompanied by corresponding benefits. A related concern is that such negative perception would drive out transparent firms from the market in the long run (a.k.a., adverse selection problem). Caveats are in order. To empirically address our research question, we cannot help making some assumptions which unavoidably sacrifice academic rigor. First, we compare earnings quality constructs from a single estimation model (i.e., a pooled regression) across countries. By doing so, we assume that the single model fits well to every economy, which is unlikely. Therefore, our earlier inferences would not hold valid to the extent that the fitness of the models significantly varies across countries. Second, we do not intend to explain why accounting transparency differs across countries. Prior studies document a set of country-level characteristics that explain cross-sectional variations of earnings quality across countries. However, including all of those country-level differences would not serve this paper because we are not interested in why earnings quality differs across countries but whether earnings quality differs (and whether Korea actually belongs to the lowest group). Although we control for several popular country-level variables including accounting (IFRS adoption), economic (GDP level and growth) and legal (the Heritage foundation’s ‘Legal’ and ‘Regulation’ indices) environment proxies for a robustness check, it is our intention to better capture the differences in earnings quality associated with country-level characteristics by construct. In sum, the findings of this paper call for a market mechanism to fairly compensate for accounting transparency, which will in turn provide managers with an incentive to voluntarily improve transparency. This paper is only the first step to provide a policy implication regarding seemingly unfair perception of accounting transparency in Korea. We look forward to future research in a journey towards fair assessment of accounting transparency in Korea.