Abstract

All Listed Companies are required to apply K－IFRS, while Non－Listed Firms are required to reduce the economic costs and the burden of relatively complex accounting. That’s the why K－GAAP is used as the primary accounting standard, and K－IFRS is optionally applicable. However, although K－GAAP has advantages such as an economic cost recently, Non－Listed Firms applying K－IFRS are increasing. This study analyses the difference in the accounting and real earnings management aiming Non－listed Firms applying K－GAAP, the principal accounting standard applied in principle, and Non－Listed Firms companies applying K－IFRS, the optionally applicable accounting standard. Specifically, this paper examined whether there are discrepancies in accounting and physical Earnings Management between consolidated financial statements, separate financial statements, and individual financial statements for Non－Listed Companies that can select accounting standards. The results of the empirical analysis are as follows. First, It is indicated that Non－Listed Firms which make K－IFRS financial statements in the consolidated and separate financial statements have less accounting and real Earnings Management than Non－Listed Firms which make K－GAAP financial statements. However, the individual financial statements noted that the firms making K－IFRS financial statements made less accounting earnings management and made more real earnings management than those making K－GAAP financial statements. These results imply that Non－Listed Firms applying K－IFRS have less Earnings Management, suggesting the need to expand K－IFRS application to Non－Listed Firms. Second, after the introduction of the New ISA 600, which was implemented from 2014, it is shown the accounting earnings management decrease of companies applying K－IFRS, confirming the effectiveness of the policy of the New ISA 600. Third, it is demonstrated that Non－Listed Firms with assets of over 100 billion won, which is the classification criteria of Non－Listed Large Companies grow lower in accounting Earnings Management than Non－Listed Firms with assets of under 100 billion won. This paper is the first paper to compare and analyze the accounting and real Earnings Management of consolidated, separate and individual financial statements of Non－Listed Firms using K－GAAP and K－IFRS. It is meaningful to present the results which can help policy decisions on whether policy－maker expand K－IFRS of Non－Listed Firms.

Keywords

• Non－Listed Firms
• Listed Firms
• K－GAAP
• K－IFRS
• Earnings management
• Accounting Earnings Management
• Real Earnings Management
• New ISA 600

Related Articles

• The Effect of the Overvalued Stock Price on Financial Reporting Opacity

  Jong-Il Park

  21(4) 103-150

  Abstract Full Text for PDF

• A Reexamination of Abnormal Audit Fees or Audit Hours and Audit Quality29) －New Data and New Evidence－

  Jong-Il Park

  19(5) 9-53

  Abstract Full Text for PDF

• The Submission of Unaudited Financial Statements to the Securities and Futures Commission and Audit Quality

  Jong-Il Park

  16(6) 135-172

  Abstract Full Text for PDF

• The Effect of IFRS Adoption on Real Earnings Management

  Jong-Il Park

  16(5) 65-110

  Abstract Full Text for PDF

• Empirical Evidence on the Relation between Real Earnings Management and the Cost of Debt

  Su-Keun Kwak

  16(5) 243-283

  Abstract Full Text for PDF