Browse > Article
http://dx.doi.org/10.14400/JDC.2014.12.11.99

Relationship of earnings and credit rating before and after IFRS  

An, Kyung-Su (Kyonggi University)
Kim, Kwang-Yong (Baekseok Arts University)
Publication Information
Journal of Digital Convergence / v.12, no.11, 2014 , pp. 99-112 More about this Journal
Abstract
This study the impact on the real earnings management credit rating (RANK), and looked at the impact on the real earnings management grade credit rating changes (decrease, increase) the effects in detail. firm for a total of 06 years for firm that are listed on the Korea Stock Exchange from 2008 to 2013 for the hypothesis - using the proceeds of the year 2,583 sample were analyzed to study. A regression analysis of the relevance of the credit rating (RANK) and real earnings measured results between the credit rating and a measure of real earnings management ACFO and ADE (+) between AMC (-) IFRS and receive relevant ADE between(+) between AMC (-) if the credit rating (RANK) is increased ACFO and is significantly sound level at 1% showed the relevance of (+) did not significantly ADE (+) 10% of AMC if the credit rating fell ACFO is (-) from AMC show the relevance of positive credit rating is dropped capital letter showed for performing real earnings management of positive even give up the future cash flow in order to reduce the cost.
Keywords
credit rating(s); earnings manipulation; Real Earnings Management; earnings management; IFRS;
Citations & Related Records
연도 인용수 순위
  • Reference
1 Degeorge, F., J. Patel, and R. Zeckhauser, Earnings Management to Exceed Thresholds. Journal of Business, Vol. 72, pp. 1-33, 1999.   DOI   ScienceOn
2 Burgstahler. D and I Divhev, Earning Management to Avoid Earnings Decreases and Losses. Journal of Accounting and Economics, Vol. 24, pp. 99-126, 1997.   DOI   ScienceOn
3 Caton G., C. Chiyachantana, C. Chua, and H. Goh, Earnings Management Surrounding Seasoned Bond Offering : Do Managers Mislead Ratings Agencies and the Bond market?. Journal of Financial and Quantitiative Analysis, Vol. 46, No. 3, pp. 687-708, 2011.   DOI   ScienceOn
4 Roychowdhury, S., Earnings Management Through Real Activities Manipulation. Journal of Accounting and Economics, Vol. 42, pp. 335-370, 2006.   DOI   ScienceOn
5 Cohen, D., A. Dey and T. Lys., Real and Accrual Based Earnings Management in the Pre-and Post-Sarbanes-Oxley Periods. The Accounting Review, Vol. 83, No. 3, pp. 757-787, 2008.   DOI   ScienceOn
6 Cohen, D., and P. Zarowin., Accrual-Based and Real Earnings Management Around Seasoned Equity Offerings. Working paper. New York University., 2010.
7 Kim, J., and B. Sohn., Real Versus Accrual-Based Earnings Management and Implied Cost of Equity Capital, Working Paper, 2009.
8 Pae S., and T. Quinn., Do Firms Manipulate Earnings When Entering the Bond Market?. Academy of Accounting and Financial Studies Journal, Vol. 15, No. 1, pp. 99-115, 2011.
9 Dechow. P. M., and I. D. Dichew, The Quality of Accruals and Earnings : The Role of Accrual Estimation Errors. The Accounting Review, Vol. 77, pp. 35-59, 2002.   DOI   ScienceOn
10 Graham, J., C. Harvey, and S. Rajgopal, The Economic Implications of Corporate Financial Reporting. Journal of Accounting and Economics, Vol. 40, pp. 3-73, 2005.   DOI   ScienceOn
11 Jeong Ok Kim, Gil S. Bae, Hybrid Debt Issuance and Earnings Management: An Analysis of Public and Private Placement. Korean accounting review, Vol. 29, No. 2, pp. 83-109, 2004.
12 Holthausen. R. W., and R. Leftwich., The Effect of Bond Rating Changes on Common Stock Prices. Journal of Financial Economics, Vol. 17, pp. 57-89, 1986.   DOI   ScienceOn
13 Jong Il Park, Chan Woong Park, The Effects of Discretionary Accruals by Non-listed Firms on the Association between Earnings and Cost of Debt. Journal of Taxation and Accounting, Vol. 12, No. 3, pp. 429-458, 2011.
14 Hyun-Ju Moon, A Relation among Debt Ratio, Variance of Profits and Discretionary Accruals. Korea Journal of Business Administration, Vol. 20, No. 4, pp. 1647-1666, 2007.
15 Jung Kyo Kim, Soon Mi Yu, Hyun Jin Kim, The Impact of Real Earnings Management on Cost of Capital. Korea International Accounting Review, Vol. 44, pp. 23-48, 2012.
16 Goh, J. C., and Ederington, L., Is a Bond Rating Downgrade Bad News, Good News, or No News for Stockholders?. The Journal of Finance (December), pp. 2001-2008, 1993.
17 Ashbaugh-Skaife. H., D. Collins, and R. LaFond., The effects of corporate governance of firms' credit ratings. Journal of Accounting and Economics, Vol. 42, pp. 203-243, 2006.   DOI   ScienceOn
18 Hee Jang Oh, The Effect of Commercial Paper Rating Changes on Stock Prices Estimation. Korean Management review, Vol. 28, No. 4, pp. 1073-1098, 1999.
19 Moon Tae Kim, June Bok Wee, Sung Il Jeon, Controlling Effects of Corporate Bonds Grading System on Earnings Management. Asia-Pacific Journal of Financial Studies, Vol. 35, No. 5, pp. 45-74, 2006.
20 Kuk Hyun Choe, An Na Shin, An Empirical Study of the Effects of Credit Ratings on Earnings Management. Accounting Information Review, Vol. 24, No. 1, pp. 125-158, 2006.
21 Jee Hong Kim, Jai Min Goh, Yun Sung Koh, Real earnings management to avoid loss and smooth income. Korean Accounting Journal, Vol. 17, No. 4, pp. 31-63, 2008.
22 Soon Suk Yoon, Gun Yull Lee, Earnings Management of Seasoned Equity Offerings. Korean accounting review, Vol. 26, No. 4, pp. 1-26, 2001.
23 Ashbaguh. H., R, Lafond and B. Mayhew, Do Non-audit Services Compromise Audit Independence? Further Evidence. The Accounting Review, Vol. 78, No. 3, pp. 611-639, 2003.   DOI   ScienceOn
24 Dichev, I., and D. Skinner., Large-Sample Evidence on the Debt Covenant Hypothesis. Journal of Accounting Research, Vol. 40, pp. 1091-1123, 2002.   DOI   ScienceOn
25 In Chul Na, Jong Hyun Kim, Does Accruals Quality Moderate the Informativeness of Earnings with Respect to Corporate Bond Ratings. Accounting Information Review, Vol. 27, No. 4, pp. 241-273, 2009.
26 Jorion. P. and Z. Gaiyan, Earning Management to Avoid Earnings Decreases and Losses. working paper, 2009.