내부회계관리제도의 취약점과 이익의 질, 정보비대칭 및 자본시장평가

초록

A series of accounting scandals that started with the Enron, WorldCom, and Daewoo implies that the loss of accounting reliability may interrupt capital market operation. In response to accounting scandals, implementation of Internal Accounting Control System (IACS) has become a mandatory requirement in 2003. IACS has been effective since April 2004 in Korea. This study examines the effectiveness of IACS in three aspects using firm-year sample of all companies listed on KOSPI and KOSDAQ. In concrete, this study examines the effect of material weaknesses in internal accounting control system (ICW) on earnings quality, information asymmetry, and capital market evaluation. In general, reporting ICW implies the existence of problems in accounting information generation and disclosure process. Companies reporting ICW are expected to show lower level of earnings quality. The effect of ICW on earnings quality is only direct effect, but information asymmetry and capital market evaluation can be classified into two: direct effect and indirect effect. That is, ICW indirectly affect information asymmetry through lowering earnings quality as well as ICW directly affects information asymmetry. Moreover, ICW have both direct and indirect effect on capital market evaluation. To the extent of indirect effect, ICW decrease earnings quality and increase information asymmetry, and ultimately, affect investment decisions of market participants. Therefore not only direct effect of ICW, but also indirect effect of ICW should be recognized so as to figure out the effectiveness of IACS. This study analyzes direct effect and indirect effect of ICW through structural equation model. As a result, this study finds that ICW lower earnings quality and increases information asymmetry. Also, this study suggests that capital market have propensity to undervalue companies reporting ICW. Moreover, the result implies that lowering earnings quality and increasing information asymmetry, rather than direct effect of ICW, attribute the undervaluation for companies reporting ICW. This study makes several contributions. Firstly, this study differentiates from prior studies in that it delivered a comprehensive analysis the benefits of the internal accounting control system using structural equation model by considering moderating variables. Secondly, this study proposes supportive, timely, and comprehensive evidences for the argument that the benefits of internal control system exceeds the costs. Lastly, this study contributes to the companies operating the internal accounting control system, supervisory institutions, market participants, and auditors by providing the results suggesting that capital market tend to undervalue companies with ICW.

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