Real Earnings Management in Korean Family Firms|RISS 상세보기

다국어 초록 (Multilingual Abstract)

This study analyzed the correlation between the existence of the controlling shareholder and the real earnings management of the Korean family companies by using the multiple regression analysis. In the meantime, in western academia, there has been a hypothesis of exploitation effect and reputation effect in relation to the management activities of the controlling shareholder of the family enterprise. The exploitation effect hypothesis argues that the dominant shareholder in the family enterprise discretionarily changes the actual sales activities or investment activities in the managerial position for the private interests of the owner or his family, resulting in the exploitation effect that takes away the interests of minority shareholders or external investors. The reputation effect hypothesis argues that the dominant shareholder of a family company emphasizes the reputation of the family and pursues long-term value management, so that short-term real earnings management does not affect the entire cash flow. This study shows that the real earnings management was not found in Korean family companies before the introduction of K-IFRS, but the real earnings management increased significantly during the period after the introduction of K-IFRS. In other words, after 2011, when K-IFRS was mandatory, Korean listed family companies increased real earnings management very significantly, which led to exploitation effects that expropriated the interests of small shareholders or external investors of companies by controlling shareholder managers. An analysis of the entire sample period, including the period from 2004 to 2010, the period before the introduction of K-IFRS, and the period from 2011 to 2017, the period after the introduction of K-IFRS, showed a very high level of real earnings management in Korean family companies. This finding confirms that Korean family companies have implemented a lot of real earnings management to pursue private interests, resulting in an exploitation effect theory that eventually exploits the interests of external investors.

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참고문헌 (Reference)

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