Journal of Navigation and Port Research (한국항해항만학회지)

Korean Institute of Navigation and Port Research (한국항해항만학회)
권호 표지
DOI QR코드

DOI QR Code

Audit by Big4 Accounting Firms and Earnings Management of Shipping Companies

Big4 회계법인의 감사와 해운사의 이익조정

  • Soon-Wook Hong (Division of Shipping Management, National Korea Maritime and Ocean University)
  • 홍순욱 (국립한국해양대학교 해운경영학부)
  • Received : 2024.05.20
  • Accepted : 2024.06.04
  • Published : 2024.08.31
Download PDF
⟨ Previous Next ⟩

Abstract

The purpose of this study is to investigate whether Big 4 accounting firms contribute to the reduction of earnings management when auditing shipping companies. Generally, it is understood that companies audited by the Big 4 accounting firms engage in minimal earnings management and maintain high audit quality. However, these factors may vary depending on industry and firm size. As a result, this study empirically analyzes the impact of audits conducted by large accounting firms on earnings management within the shipping industry. The Big 4 accounting firms, namely PwC, KPMG, Deloitte, and EY, are the focus of this research. Discretionary accruals are employed as a proxy for earnings management, with the modified J ones model and the performance matched model used to measure discretionary accruals. The analysis, which covers shipping companies listed on KOSP I from 2001 to 2023, reveals that audits conducted by the Big 4 accounting firms do not significantly influence earnings management in the shipping industry. Unlike the general case, it is evident that audits by the Big 4 accounting firms do not play a role in reducing earnings management in shipping companies. This paper is significant as it examines the role of auditors within the shipping industry and presents findings that deviate from commonly known information. Shipping companies should take into consideration that the audit quality of the Big 4 accounting firms may not always be guaranteed when selecting an auditor. Furthermore, supervisory authorities such as the Financial Supervisory Service should engage in oversight based on an accurate understanding of the audit quality offered by the Big 4 accounting firms.

본 연구는 Big4 회계법인이 해운사를 감사할 경우 이익조정을 경감시키는 역할을 하는지 검증하는 것을 목적으로 한다. 일반적으로 Big4 회계법인이 감사한 기업의 이익조정은 작고 감사품질은 높다고 알려져 있지만, 규모, 산업 등 처한 상황에 따라 다를 수도 있다. 따라서 본 연구는 Big4 회계법인의 감사가 해운사의 이익조정에 미치는 영향을 실증분석한다. Big4 회계법인은 삼일, 삼정, 안진, 한영 등 4대 회계법인이다. 이익조정의 대용치로 재량적발생액을 사용하고, Dechow et al.(1995)이 고안한 수정Jones모형과 Kothari et al.(2005)이 고안한 성과대응모형으로 재량적발생액을 측정한다. 2001년부터 2023년까지 KOSPI에 상장된 해운사를 대상으로 분석한 결과, Big4 회계법인의 감사는 해운사의 이익조정에 유의한 영향을 미치지 않는 것으로 나타났다. 일반적인 경우와 다르게 Big4 회계법인의 감사는 해운사의 이익조정을 경감시키는 역할을 하지 못한 것으로 판단된다. 본 논문은 해운업이라는 특수한 산업에서 감사인의 역할에 관해 연구해 일반적으로 알려진 바와 다른 결과를 도출했다는 점에 의의가 있다. 해운사들은 감사인을 선정할 때 Big4 회계법인의 감사품질이 항상 좋은 것만은 아니라는 점을 고려해야 할 것이다. 또한, 금융감독원 등 감독 당국은 Big4 회계법인의 감사품질에 대한 정확한 이해를 바탕으로 감리·감독에 임해야 할 것이다.

Keywords

References

  1. Ahn, J.(2023), "Auditor Size and Analysts' Earnings Forecast Accuracy: The Moderating Effect of Earnings Manipulation", Study on Accounting, Taxation and Auditing, Vol. 65, No. 4, pp. 87-119.
  2. Becker, C., Defond, M., Jiambalvo, J. and Subramanyam, K.(1998), "The Effect of Audit Quality on Earnings Management", Contemporary Accounting Research, Vol. 15, No. 1, pp. 1-24.
  3. Cho, Y.(2016), "The Crisis of Shipbuilding Industry and Shipping Industry and Restructuring Policy", The Journal of Labor Studies, Vol. 33, pp. 5-50.
  4. DeAngelo, L.(1981), "Auditor Size and Audit Quality", Journal of Accounting and Economics, Vol. 3, No. 3, pp. 183-199.
  5. Dechow, P. M., Sloan, R. G. and Sweeney, A. P.(1995), "Detecting Earnings Management", The Accounting Review, Vol. 70, No. 2, pp. 193-225.
  6. Dopuch, N. and Simunic, D.(1982), "Competition in Auditing: An Assessment", Fourth Symposium on Auditing Research, Urbana, University of Illinois, pp. 401-450.
  7. Francis, J. and Krishnan, J.(1999), "Accounting Accruals and Auditor Reporting Conservatism", Contemporary Accounting Research, Vol. 16, No. 1, pp. 135-165.
  8. Hong, S. W.(2024), "A Study on ESG Activities of Shipping Companies", Journal of Navigation and Port Research, Vol. 48, No. 1, pp. 55-61.
  9. Hwang, I., Kang, S. and Jung, D.(2009), "Does Outstanding Audit Quality of Big 4 Audit Firms Apply to Corporations at All Sizes?", Korean Management Review, Vol. 38, No. 1, pp. 1-34.
  10. Jeong, J.(2012), "The Effect of Accounting Firms' Size on Audit Quality", Accounting Information Review, Vol. 30, No. 3, pp. 329-353.
  11. Jiang, J., Wang, I. and Wang, K.(2019), "Big N Auditors and Audit Quality: New Evidence from Quasi-Experiments", The Accounting Review, Vol. 94, No. 1, pp. 205-227.
  12. Jones, J. J.(1991), "Earnings Management During Import Relief Investigations", Journal of Accounting Research, Vol. 29, No. 2, pp. 193-228.
  13. Kim, J.(2022), "Earnings Management and Seasoned Equity Offerings : The Moderating Role of Big4 Accounting Firms", Tax Accounting Research, Vol. 71, pp. 49-75.
  14. Kim, J., Yu, S. and Kim, G.(2011), "The Effect of Audit Quality on Earnings Management", Korea International Accounting Review, Vol. 38, pp. 43-74.
  15. Kim, K.(2014), "The Association between K-IFRS Adoption and Earnings Management : Focusing on External Auditor Size", Study on Accounting, Taxation and Auditing, Vol. 56, No. 1, pp. 117-146.
  16. Koh, Y. and Choi, H.(2014), "Reconsideration of the Audit Quality in accordance with Auditor Size", Journal of Taxation and Accounting, Vol. 15, No. 2, pp. 143-177.
  17. Kothari, S. P., Leone, A. J. and Wasley, C. E.(2005), "Performance Matched Discretionary Accrual Measures", Journal of Accounting and Economics, Vol. 39, No. 1, pp. 163-197.
  18. Lee, H. and Kim, H.(2021), "New International Standards on Auditing", Shinyoungsa, Kyunggido. p. 21.
  19. Lee, Y., Kim, T. and Kim, S.(2010), "The Effect of whether Auditor is Big4 or not and Audit Tenure on Quality of Earnings", Review of Accounting and Policy Studies, Vol. 15, No. 1, pp. 33-62.
  20. Moon, H.(2007), "A Relation among Debt Ratio, Variance of Profits and Discretionary Accruals", Korean Journal of Business Administration, Vol. 20, No. 4, pp. 1647-1666.
  21. Moon, T.(2023), "Auditors Change and Value Relevance", Korea International Accounting Review, Vol. 108, pp. 75-95.
  22. Myers, J., Myers, L. and Omer, T.(2003), "Exploring the Term of the Auditor-Client Relationship and the Quality of Earnings: A Case for Mandatory Auditor Rotation?", The Accounting Review, Vol. 78, No. 3, pp. 779-799.
  23. Nah, C. and Choi, K.(2003), "Accounting Accruals and the Demand for Differential Audits", Korean Accounting Review, Vol. 28, No. 1, pp. 1-32.
  24. Seo, K., Park, J., Roh, H. and Ahn, S.(2023), "The Study on Auditing Crypto Assets", Study on Accounting, Taxation and Auditing, Vol. 65, No. 3, pp. 35-62.
  25. Sug, W., Kim, E. and Oh, O.(2013), "The Effects of Engagement Partners' Personal Characteristics on Audit Quality", Korean Journal of Business Administration, Vol. 36, No. 1, pp. 61-82.
  26. Teoh, S. and Wong, T.(1993), "Perceived Auditor Quality and the Earnings Response Coefficient", The Accounting Review, Vol. 68, No. 2, pp. 346-366.
  27. Yoo, J. and Kim, S.(2019), "The Impact of a Corporate External Opacity on the Relationship of Audit Time with Audit Quality and Audit Fees", Study on Accounting, Taxation and Auditing, Vol. 61, No. 1, pp. 237-276.