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http://dx.doi.org/10.5392/JKCA.2012.12.12.385

Chaebol and Earnings Management  

Lim, Hyoung-Joo (부산대학교 경영학과)
Publication Information
The Journal of the Korea Contents Association / v.12, no.12, 2012 , pp. 385-394 More about this Journal
Abstract
This study investigates whether earnings management behavior of chaebol firms differ from that of non-chaebol firms. The ownership structure of chaebol firms is characterized by the dominance of one largest shareholder and his family members who typically participate in the management of the firm directly or indirectly and influence most of the important management decision. This study adopts the random effect model and the hausman and talyor model, using a panel of 5092 firm-year over a period from 1991 to 2010 to control for potential heterogeneity and endogeneity that may cause sever bias. This study finds that there is no difference in accrual based earnings management level between chaebol firms and non-chaebol firms. However, chaebol firms appeared to engage less real earnings management that is known to negatively affect future earnings and share prices. The results are consistent when controlling for potential heterogeneity and endogeneity in the hausman and taylor model. The results may be of interest to various stakeholders, policy makers, standard setters and academic researchers.
Keywords
Chaebol; Accrual based Earnings Management; Real Earnings Management; Panel Data;
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