이익유연화, 보수적 회계처리 및 재량적 발생액이 신용등급에 미치는 영향

다국어 초록 (Multilingual Abstract)

This paper examines the effect of earnings quality on credit ratings. This paper uses income smoothing, accounting conservatism, and discretionary accruals as proxies for earnings quality. Prior studies suggest that both income smoothing and conservative accounting are one of the private information to deliver future cash flow of a firm while discretionary accruals is a vehicle to manage reported earnings for manager`s opportunistic behavior (Watts 2003; Healy and Wahlen 1999) Specifically, Francis et al. (2004, 2005) investigates the effect of earnings quality on cost of capital. They estimate several measurements as proxies for earnings quality and find that firms with high earnings quality experience low cost of equity. However, other studies identify a contrast evidence. Subramanyam (1996) suggests that discretionary accruals is a useful channel to inform a manager`s private information. Penman and Zhang (2002) also suggest that conservative accounting may lead to a biased financial reporting due to a unmatched revenues or expense. Meanwhile, a credit rating company is considered as one of the sophisticated agencies to provide a intrinsic value of a firm. The credit companies analyze a firm to determine the credit rating of the firm. Generally, they utilize more sophisticated tools and accounting information on credit rating. Therefore, investigation on the effect of earnings quality with credit company`s perspective is worth exploring. However, a little study is progressed to examine the effect of earnings quality on credit ratings. This paper tends to fill the gap. In this paper, we predict a positive association between income smoothing and conservatism and credit ratings, whereas a negative association between discretionary accruals and credit ratings. To test this prediction, we measure income smoothing using Leuz et al. (2003)`s method, accounting conservatism using Baik and Lee (2004)`s method, and discretionary accruals using Kothari et al. (2005)`s method. The credit rating information comes from KIS-Library. The corporate credit ratings have 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. The observations of 11,939 firm-year from 2000 to 2009 are used. We first test the effect of each measurement on credit ratings using OLS regression. Then we analyze a relative effect of each measurement on credit rating. After controlling for credit ratings characteristics, we find that firms with high level of income smoothing are more likely to have a good credit ratings. And firms with more conservative accounting also tend to have a good credit ratings. However, discretionary accruals is negatively associated with credit ratings, which means that firms with greater discretionary accruals experience low credit ratings. These results are consistent to our predictions. We test our hypotheses with more strict methodologies again. we apply a ordered logit test, clusteringadjusted ordered probit regression, clustering tests and Newey and West (1987) for robustness of our findings. Results from these analyse are identical to a main result. In terms of a relative effect of earnings management on credit ratings, a magnitude of discretionary accruals is greater than that of other variables. Especially, a difference between discretionary accruals and other variables is statistically significant, suggesting that a credit rating company considers a aggressive earnings management with more carefully. In sum. our findings suggest that credit companies use earnings quality information when they evaluate a firm`s credit rating. Specifically, both income smoothing and conservative accounting have a positive effect while discretionary accruals has a negative effect on credit ratings. The results of this paper have various implications. The results of this paper suggest that earnings quality has a different effect on credit ratings. That is, credit compani

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