Related party transactions and income smoothing: new evidence from Korea
- 주제(키워드) Income smoothing , related party transaction , operating RPT , non-operating RPT , earnings informativeness
- 주제(기타) Business, Finance
- 주제(기타) Economics
- 설명문(일반) [Shin, Il Hang] Gachon Univ, Coll Business & Econ, 1342 Seongnamdaero, Seongnam Si 13120, Gyunggi Do, South Korea; [Shin, Il Hang] Chonbuk Natl Univ, Coll Commerce, Jeonju Si, South Korea; [Sohn, Sung Kyu] Yonsei Univ, Sch Business, Seoul, South Korea; [Park, Sorah] Ewha Womans Univ, Ewha Sch Business, Seoul, South Korea
- 등재 SSCI, SCOPUS
- 발행기관 ROUTLEDGE JOURNALS, TAYLOR & FRANCIS LTD
- 발행년도 2021
- 총서유형 Journal
- URI http://www.dcollection.net/handler/ewha/000000181472
- 본문언어 영어
- Published As http://dx.doi.org/10.1080/16081625.2019.1566011
초록/요약
We examine the relationship between related party transactions (hereafter, RPTs) and income smoothing using a sample of Korean firms from 2001 to 2013. We hypothesize that RPTs can be an efficient tool for income smoothing activity because both controlling shareholders and managers related to the execution of RPTs have incentives for income smoothing. Consistent with our conjecture, we find that RPTs are significantly associated with income smoothing. In particular, operating RPTs are shown to be an efficient tool to achieve smooth earnings path. We further document that income smoothing based on RPTs improves the informativeness of firms' reported earnings about their future earnings, which is measured by future earnings response coefficients (FERC).
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