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.
ESG Leading Firm and ESG Performance: Focusing on Business Groups ESG 리딩기업과 ESG 성과: 재벌기업을 중심으로
양승희 Seunghee Yang , 전홍민 Hongmin Chun
DOI:10.24056/KAR.2023.02.001 KAR Vol.48(No.1) 1-35, 2023
Abstract
This paper aims to provide insight into the current status and significance of ESG management in Korean chaebol firms by comparing ESG performance of the SK group, which is undoubtedly a leading firm in terms of ESG performance in Korea, with that of other chaebol firms, and investigate the value implications of such differences. Analyzing 1,395 firm-years from 2011 to 2019, we find that the SK group exhibits superior ESG performance relative to other chaebol groups, paritcularly in terms of environmental and governance performance. However, the gap between the two groups declined after the SK group’s declaration of DBL management. Moreover, while better ESG performance leads to lower firm value for the SK group, the relation is reversed for other chaebol firms. Overall, our findings imply that ESG management incurs nontrivial direct and indirect costs, and, as a result, can accompany the sacrifice of short-term financial value.
Information Content of Liquidity Risk Disclosure 유동성위험 주석의 정보유용성
이상혁 Sang Hyuk Lee , 유용근 Yong Keun Yoo
DOI:10.24056/KAR.2023.02.002 KAR Vol.48(No.1) 37-68, 2023
Abstract
This paper examines whether the liquidity risk disclosure in accordance with K-IFRS 1107 provides useful information to investors. Specifically, this paper examines the relationship between the amount of liquidity risk, measured as the difference in contractual cash flows and carrying amounts of financial liabilities in the maturity analysis disclosed in the liquidity risk disclosure, and the cost of capital which is a measure of the firm’s risk. Using samples listed on the KOSPI market from 2011 to 2018, the results show a significant positive relationship between the amount of liquidity risk and the cost of capital. This results indicate that liquidity risk disclosure provides useful information to investor. On the other hand, this positive relationship appears when the level of information asymmetry is high, indicating that the information content depends on the firm’s financial reporting environment. Further analyses show that a significant positive relationship between the amount of liquidity risk and the cost of capital for firms with a small amount of information provided in the capital market or with high cost of debt. The contributions of this paper are as follows: First, to our knowledge, this is the first empirical study to examine the information content of quantitative information about liquidity risk disclosure. Second, through the results that liquidity risk disclosure provides useful information to investors, this paper provides the policy implication for the regulators that more accurate liquidity risk information should be provided to investors through best practices.
Key Words
유동성위험, 자기자본비용, 정보비대칭, 정보유용성, cost of capital, information asymmetry, information content, liquidity risk
The Effect of Difference between Actual and Standard Audit Hours on Tax Avoidance 실제감사시간과 표준감사시간의 차이가 조세회피에 미치는 영향
이정희 Jung Hee Lee , 이유선 Yu Sun Lee , 전규안 Kyu An Jeon
DOI:10.24056/KAR.2023.02.003 KAR Vol.48(No.1) 69-109, 2023
Abstract
According to the External Audit Act revised in 2017, Korean Institute of Certified Public Accountants(KICPA) has implemented the standard audit hours(“SAH”) system as of 2019. This study aims to verify if the system helped reduce tax avoidance of companies. The samples were taken from 5,352 of yearly data of stock-listed companies on Korea Exchange from 2015 to 2019. The results of the empirical analysis are as follows. First, it was found that the corporations that meet the SAH were lower in tax avoidance than the others, and also that the better the corporations met the SAH, the less they avoided taxation. From the results using abnormal audit hours, it was found that the effect of the corporations with the abnormal audit hours being positive on tax avoidance was not different from those without. The results show that the implementation of the SAH system can lead to reduce tax avoidance, and that the normal audit hours estimated using the actual audit hours are limited as criteria for appropriate audit hours. Second, it was found that the corporations that got audited by Big4 auditors with meeting the SAH were lower in tax avoidance than those that didn’t. Third, it was found that the corporations that listed on the KOSDAQ with meeting the SAH were lower in tax avoidance than those that didn’t. Meanwhile, when comparing the results using the SAH with those using the abnormal audit hours, consistent results were found from the SAH and inconsistent from the abnormal hours.
Key Words
표준감사시간, 실제감사시간, 외부감사법, 조세회피, standard audit hours, actual audit hours, New External Audit Act, tax avoidance
The Relationship between Audit Hours and Stock Price Crash Risk 감사시간과 주가붕괴위험 간의 관계: 직급별 감사시간을 중심으로
남기만 Giman Nam , 이종은 Jong Eun Lee
DOI:10.24056/KAR.2023.02.004 KAR Vol.48(No.1) 111-152, 2023
Abstract
This study examines the effect of audit hours(e.g., total audit hours, labor mix hours) on the stock price crash risk and then the effect of the related risk on one-year ahead total audit hours and labor mix hours. In this study, we find that the stock price crash risk is significantly and negatively associated with total audit hours and audit hours of registered certified public accountants. Meanwhile, the audit hours of the partners and trainee certified public accountants are not significantly associated with stock price crash risk. Those results are more pronounced for year-end audits rather than interim ones. Moreover, we find that firms and auditors cope with stock price crash risk by increasing total audit hours and/or audit hours of registered certified public accountants. Taken together, this study contributes to relevant research in that from the input-based viewpoints, labor mix hours and the timing of audit have a significant and differential effects on audit quality. The empirical findings of this study provide stakeholders such as shareholder, creditors and regulators with new measure for output-based audit quality indicator. Also, with regard to the adoption of standard audit hours system, this study provides additional evidence and insights for regulators that sufficient audit hours play a critical role in enhancing audit quality.
A Study on the Systematic Relationship between Short Selling and SG&A Information 공매도와 판매관리비 정보의 체계적 관련성에 관한 연구
정준희 Joon Hei Cheung , 기도훈 Dohoon Ki , 허강성 Kangsung Hur
DOI:10.24056/KAR.2023.02.005 KAR Vol.48(No.1) 153-191, 2023
Abstract
This study analyzed the effect of the selling general administrative (SG&A) cost signal and abnormal discretionary expenditure on short selling behavior to see if the SG&A information brings bias on the interpretation and investment decision of short-selling investors. SG&A expenditure traditionally has been considered as nagative signal for future firm value, but recent researches report positive aspects of SG&A expenditure for firms’s future performance (such as stock return, earnings). So, this study tests whether short-selling investor, recognized as a superior investor in the domestic capital market, accurately identifies the characteristics of SG&A expenditure and reflects them in the investment behavior based on information advantage on accounting information and sophisticated analysis ability. Our test results show that the short selling ratio increased as the proportion of SG&A increased and short-selling ratio fall as abnormal SG&A ratio level decreases than industry-year average. This result indicates that short-selling investors in the domestic market still treat SG&A expenditure as inefficiency of cost management. This study has academic and practical contribution to provide evidence that the short-selling investors, who are considered to be superior investors in the domestic market, have an interpretative bias for SG&A expenditure. This interpretative bias can induce distortion to the capital market investors by showing their position on firm with aggressive SG&A expenditure, which in turn, depress firms’ investment on future operations.
Key Words
공매도, 비정상재량적지출, 실제이익조정, 판매관리비, 판매관리비 신호, abnormal discretionary expenditure, investment bias, real earnings management, selling general administrative expenses, short selling
