발생액의 세무적 분해를 통한 이익관리수단에 관한 연구 = A Study on the Earnings Management Vehicles through Tax Decomposition of Accruals

다국어 초록 (Multilingual Abstract)

This study investigates 1,422 firm-year observations during the period from 1999 to 2007 to identify the vehicles that Korean firms use when they manage earnings with tax savings in mind. We decompose accruals from the perspective of tax savings to examine which components of accruals are used as the primary tools of earnings management. Accounting earnings can be divided into cash flows from operations and total accruals. Total accruals, in turn, are divided into accruals without current period tax implications and accruals with tax implications. We partition the sample into two sub-samples based on discretionary accruals in order to distinguish income-increasing firms from income-decreasing firms. We also partition the sample into two sub-samples based on discretionary accruals with tax implications in order to distinguish taxable-income-increasing firms from taxable-income-decreasing firms. The low discretionary accrual firms are defined as income-decreasing firms while the high discretionary accrual firms are considered income-increasing firms. Firms that reduce discretionary accruals with current period tax implications are defined as taxable-income-decreasing firms while firms that increase them are considered taxable-income-increasing firms. This paper uses discretionary accruals and discretionary accruals with current period tax implications as the proxies for earnings management and taxable income management. Discretionary accruals with current period tax implications are estimated using the modified Jones model (1995). Then, we examine if earnings management vehicles follow some particular patterns depending upon the extent of earnings management and taxable income management. To identify the particular patterns of earnings management vehicles, we use mean difference tests and regression analyses. The empirical results of this study reveal that there are clear differences between the employment of vehicles for earnings management and the employment of vehicles for taxable income management. We document that accruals without current period tax implications are offset by the use of discretionary accruals with current period tax implications. Also the empirical results of the study reveal that there are clear differences between taxable-income-increasing firms and taxable-income-decreasing firms in the employment of earnings management vehicles. More specifically, we document that taxableincome- decreasing firms depend heavily on accruals without current period tax implications because of the tradeoff between tax costs and non-tax costs when the firms increase reported earnings.