신용평가등급이 실제이익조정에 미치는 영향

Abstract

This study tests the association between credit rating and real earnings management. And in this paper, we analyse empirically an influence of credit rating changes (downgrade/upgrade) on real earnings management. Credit rating agencies provide opinions on the creditworthiness of entities and their obligations. Their role is to improve the efficiency of securities markets by increasing the transparency of securities and reducing information asymmetry between investors and issuers. Anecdotal evidence suggests that managers generally describe their capital structure policy in terms of target credit ratings and tend to make a variety of financing, hedging, and investment choices that allow them achieve their desired rating. Therefore, the credit rating is considered as a useful indicator to investors and bondholders. The sample consists of non-banking firms (1,960 Firm-years) with December fiscal year listed in Korea Stock Exchange over 2005~2009. The credit rating information and other firm-specific data are collected from Kis-Value Ⅲ database. The credit rating haves from 1 point to 10 points. 1 point represents firms with the worst credit rank and 10 points represents firms with the best credit rank. Roychowdhury (2006) finds evidence that firms use multiple real earnings management tools in order to meet certain financial reporting benchmarks to avoid reporting annual losses. Therefore, we study Roychowdhury (2006) used a model. We look into the abnormal cash flow from operation (ABCFO), abnormal discretionary expense (ABDE) and abnormal production cost (ABPC) to measure real earnings management. Regression analysis that were included control variables to be found significant result in the most previous works is selected as an earnings management model. The main results of this study can be summarized as follow. First, this paper finds credit rating has a significantly negative influence on the real earnings management in the regression model. Also, credit rating have an significantly positive effects on the abnormal cash flow from operation (ABCFO) and abnormal discretionary expense (ABDE) respectively. This means that better credit rating firms exhibit a lower real earnings management, accepting the hypotheses 1. Second, the credit rating downgrades have a significantly positive influence on the real earnings management. And our results imply that the managers of companies adjust real earnings upward to obtain higher credit ratings. Also, we find that managers have a motivation to obtain higher credit rating because credit ratings affect financing cost and the growth and the profitability of companies. Third, the credit rating upgrades are significantly on the abnormal cash flow from operation (ABCFO) only. These results hold after controlling for foreign ownership, ownership, size, market to book ratio, return on assets and sales growth being influenced by real earnings management. This study also finds significant association between foreign ownership, ownership, size, market to book ratio, return on assets and sales growth and the real earnings management. The findings in this study has various implication. The results of this paper suggest that credit rating gives a good signal in terms of credibility of financial reports and affect real earnings management. Therefore, this findings are very useful and provide a lot of important implications to regulators, investor and creditors that are interested in listed firms. This paper contributes to the literature on the relation between credit rating and real earning management.