The Effect of Transaction to the Related-party on the Earnings Management by Considering Controlling Shareholders Ownership

거래 상대기업의 지배주주일가 지분율을 고려한 대규모기업집단의 내부거래가 이익조정에 미치는 영향

  • 백정한 (동국대학교 경영계열(경주캠퍼스)) ;
  • 최종서 (부산대학교 경영학과)
  • Received : 2016.12.01
  • Accepted : 2017.01.20
  • Published : 2017.01.28


The merits and demerits of the chaebol in Korea has been subjected to considerable debate in recent years. In accounting research, many papers have been concentrating on tunneling that be designated as expropriation of minority shareholders by controlling shareholders. Although majority previous paper suggested related-party transaction has a negative effect to firm value, some research on related-party transaction argued it has a positive effect, also. We assume that they can't consider compositive meaning of related-party transaction and result of prior studies are mixed. In this setting, we investigate the relation between earnings management and related-party transaction which be known as strategy for tunneling by considering controlling shareholder's ownership.


Chaebol;Affiliated firms;Related-party transaction;Tunneling;Earnings management


Supported by : 부산대학교


  1. S. Chang, and J. Hong, "Economic Performance of Group-affiliated Companies in Korea: Intergroup Resource Sharing and Internal Business Transaction." Academy of Management Journal, Vol. 3, No. 43, pp. 429-448. 2000,
  2. M. Bertrand, P. Metha, and S. Mullainathan, "Ferreting out Tunneling: An Application to Indian Business Groups." The Quarterly Journal of Economics, Vol.1, No. 117, pp. 121-148. 2002.
  3. J. I. Park, H.W, Paik, and H. M. Chun, "The Effect of Related Party Transaction on Audit Fee: Evidence from Auditor's Differentiated Response on Profit or Loss Firms with Related Party Transaction." The Korean Accounting Review, No.3, Vol. 40, pp. 203-255. 2015.
  4. J. H. Choi, "Affiliates Sales and Earnings Management through Real Activities Manipulation." Journal of Finance and Accounting Information, Vol.1, No.11, pp. 53-81. 2011.
  5. The ratio of related-party transaction of firm owned by junior is twice the ratio of fims owned by parents, The CEO Score Daily. , 2016. 10.26.
  6. J. S. Baek, J. K. Kang, and K. S. Park, "Corporate Governance and Firm Value: Evidence from the Korean Fianancial Crisis." Journal of Financial Economics, No. 71, pp. 265-313. 2004.
  7. T. Mitton, "A Cross-Firm Analysis of the Impact of Corporate Governance on the East Asian Financial Crisis." Journal of Financial Economics, No.64. pp. 215-241. 2002.
  8. K. M. Kahle, and K. Shastri, Executive Loans, Working paper, University of Pittsburgh. 2003.
  9. Y. Cheung, P. Rau and A. Stouraitis, "Tunneling, Propping and Expropriation: Evidence form Connected Party Transactions in Hong Kong." Journal of Financial Economics, Vol.2, No.82, pp. 343-386. 2006.
  10. S. Claessens, S. Djankov, and L. Lang, "The Separation of Ownership and Control in East Asian Corporations." Journal of Financial Economics Vol 1-2, No. 58, pp. 81-112. 2000.
  11. J. H. Kim, and Y. S. Woo, "The Effect of Transaction to the Related-party on the Earnings Management and the Earnings Response Coefficient." Korean Accounting Review, Vol.3, No.33, pp. 25-59. 2008.
  12. M. C. Kim, Y. S. Cheon, and J. Y. Lee, "Insider Trading and Earnings Management." Korean Accounting Review, Vol.4, No.35, pp. 1-37. 2010.
  13. S. K. Sohn, J. M. Koh, and K. W. Chung, "Do Insiders Have Long-term Perspective in Choosing Earnings Management Method?" Korean Journal of Financial Studies, Vol. 4, No. 40. pp. 579-607. 2011.
  14. S. P. Kothari, A. J. Leone, and C. E. Wasley, "Performance Matched Discretionary Accrual Measures." Journal of Accounting and Economics, No. 39. pp. 163-197. 2005.
  15. L. S. Kim, "Convergence of Information Technology and Corporate Strategy", Journal of the Korea Convergence Society, Vol. 6, No, 6, pp. 17-26. 2015.
  16. M. J. Lee, and K. I, Khoe, "Development Method od Digital Content Finance-Focused on by Technical Value Evaluation", Journal of the Korea Convergence Society, Vol.6, No. 6, pp. 111-117, 2015.
  17. S. Johnson, R. La Porta, F. Lopez-De-Silanes and A. Shleifer, "Tunneling." The American Economic Review, Vol.2, No.90, pp. 22-27, 2000.
  18. J. H. Choi, "Information Value of Affiliates Transaction." Korean Accounting Journal, Vol.1 No.19, pp. 77-105, 2010.
  19. K. M. Lim, and S. B. Cho, "Study on related-party transaction in Korean Affiliated firm" Research paper, KDI 2007-05.