건설산업의 대리인비용과 이익조정이 기업부실 예측에 미치는 영향

Abstract

The study aims to examine the influence of agency costs and earnings management on the index of construction firms' failure. For the past years, the domestic construction sector has been shown the clear signs of declining because of eliminating the effects of governmental supporting for 4 river project. To resolve a swamp of stagnation of construction industry, the government decided to lay out a scheme a package of policies designed to revive this industry. In spite of stimulating the economy, construction industry is still dull and poor showing because of its business characteristics. Especially, construction industry produces on orders that affect the very existence of the company. From a practical point of view, construction firms may be in danger of financial crisis unless they would not receive the orders wanted. In this difficult situation, the managers of construction should be forced to create a new and big project for the continuance of their position. This means that stockholders place responsibility on the manager causing agency problems. The one of agency problem is shirking and the other is perk. Agents may shirk their responsibilities and not exert much effort toward the goals of the owners. Managers shirking has the potential to be extremely costly to firms. Ang et. al(2000) measures these shirking behavior using the proxy for the loss in revenues attributable to inefficient asset utilization, which can result from poor investment decisions(e.g., investing in negative net-present-value assets) or from management’s shirking(e.g., exerting too little effort to help generate revenue). The other agency problem is the perks that may be offered even if their direct consumption benefits are offset by their costs. Ang et. al(2000) calculated as the difference in dollar expenses between a firm with a certain ownership and management structure and the no-agency-cost base case firm. This measure captures excessive expenses including perk consumption. Recently, Korea government has formulated new standards for construction firms that are ruled the application of percentage-of-completion method in the construction contracts(K-IFRS NO. 1011). This current standards, however, does not assess the percentage of completion more accurately and construction firms are willing to misuse these rules toward their own intention and discretion. In this case, the managers of construction company can abuse financial reporting using earnings management. As a result, the reliability and transparency of financial reporting in construction industry could be impaired. This study analyzes three hypotheses; 1) the higher asset utilization(TURN), the lower construction firms failure 2) the higher perk consumption(PERK), the higher construction firms failure 3) the higher earnings management(DA), the higher construction firms failure. The above capital letters are the main independent variables. To test the hypotheses, the models include default index(DFLT) for the proxies of firms failure as the main dependant variables. Turnover is asset utilization ratios(TURN), and perk consumption of managers is measured by the sum of entertainment expenditures and welfare costs(PERK). Earnings management is the discretionary accruals(DA) estimated by modified Jones model(Dechow et al., 1995). Also the test models contain other control variables such as firm size(SIZE), debt ratio(DEBT), block-holders(BLOK), the ownership of foreign investors(FOR), history of engaging career(LONG), the adoption of IFRS(IFRS) and big auditors(BIG). This study shows the empirical results through statistical descriptive statistics, coefficient of correlation, mean difference analysis and the multiple regression tables. The test sample consists of 3,576 firm-year data, selected from the KRX listed companies of the fiscal year during 2005-2013. The majority of hypotheses is accepted. These results imply that 1) construction firms with good turn ratios have the safety financial healthiness 2) Too much expenditure of entertainment and welfare costs may cause the firms to reach to default 3) Boosting earnings to get orders is not fit to maintain the construction firms.