A Comparison of Earnings Management between Kse Firms and Kosdaq Firms

26 Pages Posted: 27 Mar 2006

See all articles by Soon Suk Yoon

Soon Suk Yoon

Chonnam National University - Department of Economics

Abstract

This study investigates differences in earnings management practices of Korea Stock Exchange (KSE) firms and KOSDAQ (a Korean version of the NASDAQ market) firms during the period of 1996-1997. A sample of 1,256 KSE and 577 KOSDAQ firm-year observations is used to compare earnings management practices of firms listed in the two different stock exchanges. The results of the study reveal that KOSDAQ firms tend to more actively manipulate earnings to avoid losses than KSE firms. KOSDAQ firms generally tend to increase reported earnings more aggressively than KSE firms when their operating cash flows are poor, and play down their reported earnings more when their operating cash flows are exceptionally good. The results of the study are quite robust in the sense that more aggressive earnings management practices of KOSDAQ firms persist even when operating cash flows are controlled.

Suggested Citation

Yoon, Soon Suk, A Comparison of Earnings Management between Kse Firms and Kosdaq Firms. Journal of Business Finance & Accounting, Vol. 32, No. 7-8, pp. 1347-1372, September 2005. Available at SSRN: https://ssrn.com/abstract=877426 or http://dx.doi.org/10.1111/j.0306-686X.2005.00631.x

Soon Suk Yoon (Contact Author)

Chonnam National University - Department of Economics ( email )

77 Yongbongro, Buk-gu, Gwangju
Seoul, 500-757
Korea, Republic of (South Korea)

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