상품시장 경쟁과 발생액의 질의 관련성

초록

Product market competition can be decided by firm’s business strategy or managerial decision. Firms’ profitability, stability, or investors reactions is different by the intense of competition (Hou & Robinson, 2006; Dhaliwal et al., 2014). Previous studies mentioned that product market competition play an effective external corporate governance role by monitoring opportunistic decision of the executive. Thus, this study is to examine role of industry concentration in the accounting perspective. Specifically, using the accruals quality introduced by Dechow and Dichev (2002), we investigated relationship between market competition and earnings quality. Previous studies showed that managers adjusted quantities of information to make information asymmetry by reducing information about the business segment that profitable to competitors or investors. However, the information asymmetry can be generated through the quality of information as well as the amount of information (Cheng et al., 2013). Because the firm within exclusive market choose the method that lower reported earnings (Hagerman & Zmijewski, 1979). as an evidence of Hagerman and Zmijewski (1979), the firm in exclusive market does more earnings management (Yoo et al., 2013; Shin et al., 2014). if the firm within exclusive market do earnings management through accruals, we hypothesized convertibility of accruals to cash is very low. Relationship between product market competition and accruals are both direction can be predicted. Lower product market competition increase the possibility of cartel, and create higher profitability. Due to the higher political cost, managers likely to be reluctant to reduce the internal information disclosure. in exclusive industry, disclosure channel are limited and the accuracy of information is low. Inadequate information makes opaque information environment. Investors cannot be achieved appropriate valuation of firms they invested. Thus, investors demand an additional return to companies. Using the opaque information environment, managers increase the pursuit of private interests or expand tax avoidance. To sum up, positive relationship between product market competition and accounting quality is predicted. On the contrary, there is an opinion of a negative relationship between product market competition and accounting quality. Karuna et al. (2012) and Markarian and Santaló (2014) suggest competition and earnings management are positively related by referring to managers’ compensation and worsen profitability. Markarian and Santaló (2014) suggested that competition and earnings management have a positively relationship by considering managers’ compensation and low profitability. Looking at both the logical point of view, the accruals quality and the product market competition seems relevant. For test, we use widely used model called Dechow and Dichev (2002) Model. In this model, accruals quality is measured by the extent to which current working capital accruals map onto operating cash flows of the prior, current and future periods. we deal with the conceptual definition of accounting quality that focuses on the accuracy with which financial reporting conveys information about expected cash flows in order to inform stockholders, particularly investors and creditors. Therefore, because accruals are estimates of future cash flows, earnings will be more representative of future cash flows if accruals are of good quality. In our study, the more intense competition within industries looked a higher quality accruals if competition acts its monitoring function as an effective external governance. But there is possibility that the competition decreased the quality of accounting information. For empirical test, we did empirical analysis of KOSPI the KOSDAQ market from 2005 to 2012. The empirical results, the lower the product market competition (the more exclusive) showed a lower quality of accruals. These results have been able to derive the same results analysis utilizing alternative measures, additional results evidence was found as same.

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