Korean Accounting Review (KAR) is the official journal of the Korean Accounting Association. The Korean Accounting Association (KAA) is the largest and oldest academic organization of accounting scholars and practitioners in Korea. It aims to create a fertile environment for innovation and collaborative research, to foster and improve research for the development and the promotion of accounting, and to develop a powerful network among scholars, practitioners, and authorities concerned with political decision making in this field.
Disclosure Quality Related to Fair Value and Value Relevance of Accounting Information 공정가치 공시품질과 회계정보의 가치관련성
정석우 Seok Woo Jeong , 정남철 Nam Chul Jung , 허광복 Kwang Bok Hue
DOI:10.24056/KAR.2022.08.001 KAR Vol.47(No.4) 1-31, 2022
This study examines whether the value relevance of accounting information has increased since the adoption of the K-IFRS No. 1113 ‘Fair Value Measurement’ standard in 2013. In addition, the study investigates whether the disclosure quality measured in accordance with the best practices of disclosure of fair value measurement provided by the Financial Supervisory Service is related to the value relevance of accounting information. Using a balanced panel sample of listed companies in Korea from 2012 to 2013, the study finds the following results. The introduction of a new standard that systematizes fair value measurement and disclosure shows a significant relationship with the value relevance of accounting information measured as net assets. On the other hand, the introduction of a new standard does not show a significant relationship with the value relevance of net earnings. In addition, the disclosure quality related to fair value is positively related to he value relevance of net assets. This implies that the introduction of a new standard has been useful for investors who demand high-quality disclosure and accounting information related to fair value. The results of this study have the following policy implications. First, the adoption of the K-IFRS No. 1113 increases the usefulness of fair value information, and these results are differentiated according to disclosure quality. Second, this study suggests that continuous monitoring about disclosure quality related to fair value by the regulatory authorities is necessary to improve the accounting system for fair value measurement.
K-IFRS 제1113호, 공정가치 측정, 공시품질, 감사보고서, 가치관련성, K-IFRS No. 1113, fair value measurement, disclosure quality, audit report, value relevance
Sentiment Analysis of News on Corporation Using KoBERT KoBERT를 이용한 기업관련 신문기사 감성 분류 연구
현지원 Jiwon Hyeon , 이준일 Joonil Lee , 조현권 Hyunkwon Cho
DOI:10.24056/KAR.2022.08.002 KAR Vol.47(No.4) 33-54, 2022
This study explores the accuracy level of the sentiment analysis of news article sentences from Korean newspaper, using KoBERT which is a modified version of BERT developed by Google. For comparison, we use MBERT which is the multilingual version of BERT, Google Sentiment Analysis provided through Google API, and dictionary based approach. This paper finds that the accuracy level of the sentiment classification based on KoBERT is the highest at 85.7%, achieving a significantly higher level of accuracy compared to the other three models. MBERT shows the next highest accuracy level at 77.5% and the other two models provide even lower accuracy rate. We further investigate whether the sentiment classification results obtained from these four models could predict future stock return. Using cumulative future stock returns for 3 or 5 days after the news on corporation publishes, we find that the sentiment score based on the sentiment classification from the KoBERT model predicts future return better than the other three models. Overall, these findings would serve as a reference for conducting further studies related to sentiment analysis on accounting and financial text.
The Effect of Taxable Income Volatility and Taxable Income Smoothing on Firm Risk 세무이익 변동성과 세무이익 유연화가 기업위험에 미치는 영향
김임현 Im Hyeon Kim
DOI:10.24056/KAR.2022.08.003 KAR Vol.47(No.4) 55-96, 2022
This study examines the effect of TI variance(variance of taxable income) and BT covariance(covariance between taxable income and book income) on operating risk and tax risk, and then investigated the relationship with firm risk. In addition, the effect of taxable income smoothing on the relationship between taxable income volatility and firm risk is examined. As a result of empirical analysis, it was found that TI variance is significantly related to future tax payment uncertainty, and BT covariance is significantly related to future income predictability. TI variance and BT covariance are variables highly related to firm risk. The relationship between tax income volatility and firm risk is differentiated according to the innate taxable income smoothing and discretionary taxable income smoothing. This study has the following contributions. To examine the relationship between tax income volatility and firm risk, operating risk and tax risk are considered. Taxable income smoothing is considered as a variable that affects the relationship between tax income volatility and firm risk. By examining the relationship between tax income information and firm risk, it provides useful information to investors, stakeholders, and firm risk assessment agencies.
세무이익 변동성, 세무이익 유연화, 영업위험, 세무위험, 기업위험, taxable income volatility, taxable income smoothing, operating risk, tax risk, firm risk
The Usefulness of the Quality of Corporate Tax Accruals as a Tool for Detecting Tax-related Information Risk: Analysis Using Stock Price Crash Risk 세무정보위험을 탐지하는 도구로써 법인세 발생액 품질의 유용성: 주가급락위험을 이용한 분석
김경순 Kyung Soon Kim , 이세미 Semi Lee , 이진훤 Jin Hwon Lee
DOI:10.24056/KAR.2022.08.004 KAR Vol.47(No.4) 97-149, 2022
The purpose of this study is to investigate the relationship between the measure of tax-related information risk (the quality of corporate tax accrual) and future stock price crash risk. In addition, we focus on finding the situational determinants that influence the relationship between the quality of corporate tax accrual and stock price crash risk. The analysis results are summarized as follows. First, we find that future stock price crash risk is higher in companies with poor quality of corporate tax accruals. Second, we confirm that the negative relationship between the quality of corporate tax accrual and stock price crash risk is stronger in the KOSDAQ market than in the KOSPI. Third, we confirm that the negative relationship between the quality of corporate tax accrual and the risk of a stock price crash occurs in firms for which the forecasts of financial analysts are not provided. Fourth, we find that the negative relationship between the quality of corporate tax accrual and the risk of a stock price crash is stronger in companies with a low transaction ratio of sophisticated investors (institutional and foreign investors). Finally, we confirm that the negative relationship between the quality of corporate tax accrual and stock price crash risk is stronger in companies with low ownership concentration. Overall, this study has academic contribution in that it has proven through the capital market that the quality of corporate tax accruals is useful as a tool to capture tax-related information risk.
Analysts’ Job Change and Earnings Forecast Behaviors 증권분석가의 이직에 따른 이익 예측행태의 변화
박소희 Sohee Park , 신재용 Jae Yong Shin , 강성춘 Sung-choon Kang
DOI:10.24056/KAR.2022.08.005 KAR Vol.47(No.4) 151-184, 2022
This paper investigates the impacts of sell-side analysts’ job change on their earnings forecasting behaviors. Using earnings forecasts issued by sell-side analysts in Korean brokerage houses from 2000 to 2018, we find that both forecast frequency and forecast boldness increase after analysts move to another brokerage house. The results are robust to the inclusion of year fixed effects and analyst fixed effects. Based on the idea that the change in forecasting behaviors is attributed to the transiting analysts’ concerns about their relative disadvantages in the tournament of the new brokerage houses, we further predict and find that the association is mitigated when the analysts are well-reputed, follow firms of high importance, and have previous job change experience. We further divide the sample based on the rankings of brokerage houses and find that, the increase in forecast frequency and forecast boldness is pronounced only when analysts move to low-rank brokerage houses, and their increase in forecast boldness lowers the overall accuracy of the forecasts. By analyzing the relationship between analysts’ job change and their subsequent forecasting behaviors, we suggest that analysts’ personal backgrounds can provide an important factor that determines the quality of their earnings forecasts.
A Study on the Effect on ESG Performance on the Speed of the Stock Price Process: Focused on Stock Price Delay ESG 성과가 주가 프로세스 속도에 미치는 영향에 관한 연구: 주가지연현상을 중심으로
정아름 A Reum Jung , 이미주 Mi Joo Lee
DOI:10.24056/KAR.2022.08.006 KAR Vol.47(No.4) 185-231, 2022
ESG management assumes that not only financial performance but also non-financial factors have a significant impact on the sustainability of a company. If ESG activities affect corporate value by enhancing sustainability, ESG performance will have a significant impact on stakeholder investment decision-making. In other words, ESG performance can alleviate information asymmetry by providing non-financial information about long-term corporate value that accounting information cannot convey. The contribution of a corporation’s non-financial activities for sustainability to resolving information asymmetry in an incomplete market is called the signal effect of ESG performance. This study verified the signaling effect of ESG performance by empirically analyzing the relationship between ESG performance and stock price delay. If ESG performance reduces the information asymmetry of stakeholders outside the company, the better the ESG performance, the less the stock price delay in which corporate information is not immediately reflected in the stock price. As a result of analysis using KCGS’ ESG data constructed over the period 2011-2020, we found that the overall ESG performance did not significantly affect the stock price delay, but the governance(G) performance among ESG performances reduced the stock price delay. Depending on the details of governance(G), there are differences in the effect on the s tock price delay, and due to the contagious effect of information existing in the large business conglomerates, the higher the ESG performance of the corporations belonging to the large business conglomerates, the more the stock price delay to decrease compared to other corporations. The above results show that ESG plays a role in increasing the speed at which stock prices reflect new information, and this study reveals that the effect of ESG differs between ESG items.
ESG, 주가지연현상, 지배구조, 기업집단 소속기업, stock price delay, governance, large business conglomerates
The Association between Financial Statements Comparability and Corporate Risk-taking 재무제표의 비교가능성과 기업의 위험추구
안혜진 Hyejin Ahn
DOI:10.24056/KAR.2022.08.007 KAR Vol.47(No.4) 233-261, 2022
This study examines whether financial statement comparability is related to the corporate risk-taking. Although the investment decision associated with corporate risk-taking is one of the core management activities, there are few studies which investigate the corporate risk-taking behavior in accounting area. Focusing on comparability, one of the qualitative properties of accounting information, this study examines whether the financial statement comparability affects the corporate risk-taking behavior. If a company’s financial statement can be easily compared with other companies’ financial statements, information asymmetry between managers and external information users can be reduced, and it can intensify monitoring and supervision of the management’s investment activities. As a result, it is expected that excessive corporate risk-taking will be reduced by suppressing manager’s opportunistic investments, such as constructing trenches to expand the manager’s influence, unnecessary investments for empire building, and myopic investments to obtain short-term results. In contrast, if the comparability is high, it is also possible that shareholders who can maximize their wealth through risk-taking exert investment pressure on the managers to actively take risks. Using 8,657 firm-years of domestic listing companies from 2008 to 2015, we find a negative association between financial statement comparability and corporate risk-taking, and this negative association is more pronounced in the firms with greater information asymmetry. Also, when the comparability is high, the degree to which R&D expenses increase future earnings volatility also decreases. These results have academic contributions in that they inform that the comparability affects corporate investment activities and can be a determinant of corporate risk-taking.
Earnings Forecasts and Implied Cost of Equity Capital 이익예측치와 내재자기자본비용
임승연 Seung-yeon Lim
DOI:10.24056/KAR.2022.08.008 KAR Vol.47(No.4) 263-290, 2022
This paper investigates the impacts of analysts’ optimistic earnings forecasts on the implied cost of equity capital for a sample of Korean firms over 2011-2019. We confirm that analysts’ earnings forecasts are optimistic and tend to be available for big firms, which may lead to sample selection bias. Following Easton and Sommers(2007), we estimate and compare the implied cost of equity capital (ICOE) based on analysts’ earnings forecasts and ICOE based on ex-post realized earnings and find that the former ICOE is higher than the latter ICOE by 5.1%. Instead of analysts’ earnings forecasts, we use earnings forecasts generated from two cross-sectional earnings models recommended by Li and Mohanram(2014) and estimate the implied cost of equity capital. The difference between earnings model-based ICOE and ICOE based on realized earnings is far lower than that between ICOE based on analysts’ earnings forecasts and ICOE based on realized earnings. Our findings are unchanged when the sample changes after including firms without analysts’ earnings forecasts. Empirical findings from research relying on analysts’ forecasts should be cautiously interpreted considering optimistic bias and sample selection bias.