earticle

영어

Through a case study with selected company early adopted K-IFRS, we review the changes of discretionary accruals as indicator of existence of earning management activities. We set up the following hypothesis: Discretionary accruals and its associated financial ratios changes after adopting K-IFRS reflecting increase of transparency in accounting information. Related variables are calculated for selected company, KT&G, during 2007-2010. We review the changes of indicators after introduction of K-IFRS. The results of this study show the increase of transparency assuming the change of discretionary accruals as indicator of earning management activities. Besides, discretionary accruals and the debt ratio show positive correlation indicating better business performance can lower the incentives of earnings management. IFRS introduction and debt ratio have the positive correlation indicating debt increase due to the change of the revenue recognition criteria and retirement benefits accounting. Also the introduction of IFRS and ROA have negative correlation, which can be explained by reassessment of assets as fair value with the introduction of K-IFRS. Even though this case study has limitations to generalize current results to all companies adopting new accounting standards, it may indicate overall changes in financial information with new accounting standards related with transparency issues.