Korean Accounting Review

Print ISSN 1229-3288 | Online ISSN 2508-7193

Korean Accounting Review (KAR) is the official journal of the Korean Accounting Association. The Korean Accounting Association (KAA) is the largest and oldest academic organization of accounting scholars and practitioners in Korea. It aims to create a fertile environment for innovation and collaborative research, to foster and improve research for the development and the promotion of accounting, and to develop a powerful network among scholars, practitioners, and authorities concerned with political decision making in this field.

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Current Issue

Vol.49No.22024

Current Issue
The Effect of Audit Market Concentration: Literature Review and Suggestions for Future Research 감사시장 집중도가 감사계약에 미치는 영향에 대한 문헌 검토 및 미래 연구에 대한 제언 최종학 Jong-hag Choi , 이유진 Eugenia Y. Lee , 선우희연 Hee-yeon Sunwoo 49(2) 1-35, 2024 Title The Effect of Audit Market Concentration: Literature Review and Suggestions for Future Research 감사시장 집중도가 감사계약에 미치는 영향에 대한 문헌 검토 및 미래 연구에 대한 제언 최종학 Jong-hag Choi , 이유진 Eugenia Y. Lee , 선우희연 Hee-yeon Sunwoo DOI: KAR Vol.49(No.2) 1-35, 2024 Abstract Korean regulators have initiated several policies in recent years that induce auditor mergers and enlarge auditors. Such policies are adopted to improve audit quality, but related parties have expressed concerns about the potential increase in audit market concentration caused by the policies. To provide implications to the recent changes in the audit market, this study reviews theoretical and empirical studies on the effect of audit market concentration on audit characteristics. Economic theories predict both positive and negative effects of concentration on audit quality and fees. Empirical research has documented mixed evidence on the effect of audit market concentration on audit quality and fees, while a recent study suggests that the strength of a country’s legal regime is an important determinant of the concentration-fee association. To address a criticism that concentration is an imperfect proxy for competition, recent studies have attempted to measure audit market competition using various alternative proxies other than concentration. This study comprehensively reviews the current literature on audit market concentration and provides guidance for future research on the audit market and audit contracts. Furthermore, this study provides a foundation for understanding the consequences of various audit regulations on the audit market. Key Words 감사시장의 집중도, 감사인, 회계법인, 감사보수, 감사품질, audit market concentration, auditor, audit firm, audit fees, audit quality
Effect of the Supervisory Guideline on R&D Capitalization on Discretionary R&D Expenditures: Focusing on the Pharmaceutical Industry Hyoung Seok Choo , Sun-ae Cho , Won-wook Choi , Minjoo Lee 49(2) 37-63, 2024 Title Effect of the Supervisory Guideline on R&D Capitalization on Discretionary R&D Expenditures: Focusing on the Pharmaceutical Industry Hyoung Seok Choo , Sun-ae Cho , Won-wook Choi , Minjoo Lee DOI: KAR Vol.49(No.2) 37-63, 2024 Abstract This study examines the impact of implementing supervisory guidelines on pharmaceutical industry firms’ R&D capitalization accounting practices and their actual investment decisions on discretionary R&D expenditures. By detecting a decrease in the growth rate of overall R&D expenditures in pharmaceutical industry firms following the implementation of the supervisory guideline, we hypothesize that the guideline affects firms’ investment behavior beyond accounting practices. First, this study uses 17,996 firm-year observations for 2011-2021 to demonstrate the positive relationship between R&D capitalization and discretionary R&D expenditures to verify the potential link to managerial opportunism. Furthermore, this study shows that this relationship persists even after implementing supervisory guidelines, suggesting the necessity for ongoing regulation over R&D capitalization. Finally, employing a difference-in-differences analysis, this study identifies a negative causal effect of supervisory guidelineson discretionary R &D expenditure. Several robustness tests, including controlling for confounding factors, using a balanced sample of difference-in-differences, and employing a propensity score-matched sample of difference-in-differences, further validate this negative causal effect. The results of this study provide practical implications for regulators and investors, suggesting that strict R&D capitalization guidelines worked effectively to reduce the discretionary capitalization of R&D expenditures that are unclear about future profitability. Key Words R&D capitalization, supervisory guideline, discretionary R&D expenditures, pharmaceutical industry, difference-in-differences analysis
Does Supplier Competition Affect Asymmetric Cost Behavior? Kyeongheum Ra 49(2) 65-95, 2024 Title Does Supplier Competition Affect Asymmetric Cost Behavior? Kyeongheum Ra DOI: KAR Vol.49(No.2) 65-95, 2024 Abstract This study examines the relation between supplier industry competition and asymmetric cost behavior. Analyzing data on customer-supplier dyads of publicly traded U.S. firms for the period from 1991 to 2022, I find that the degree of cost of goods sold (COGS) stickiness decreases with the level of supplier industry competition. I conduct a series of robustness tests and confirm that the main findings are robust even following change analysis, employing a lagged variable, and employing entropy balancing technique. Furthermore, in a cross-sectional test, I find that the negative relationship between supplier competition and cost stickiness becomes more pronounced within manufacturing industry sectors, further supporting the main arguments. As a supplementary test, I examine whether the relationship between supplier competition and cost stickiness is changed depending on the nature of costs. The results show a positive association between supplier industry competition and the stickiness of selling, general and administrative (SG&A) and operating costs. Overall, the present study provides contributions in several ways. This research contributes to the literature on supply chain management. While prior literature has largely focused on examining the impact of supplier competition and information sharing on firm performance and investment decisions, the present study suggests that firms consider supplier industry competition in their resource allocation decision. In addition, this study adds to the literature on cost accounting by suggesting an alternative determinant of cost stickiness. Key Words supplier competition, supply chain, asymmetric cost behavior, cost stickiness
A Study on the Sustainability of Government R&D Subsidies 정부 연구개발(R&D) 지원의 지속가능성에 관한 연구 홍희정 Hee-jung Hong , 이병산 Byung San Lee 49(2) 97-147, 2024 Title A Study on the Sustainability of Government R&D Subsidies 정부 연구개발(R&D) 지원의 지속가능성에 관한 연구 홍희정 Hee-jung Hong , 이병산 Byung San Lee DOI: KAR Vol.49(No.2) 97-147, 2024 Abstract This paper investigates the sustainability of government research and development(R&D) subsidies. The main results are as follows. First, firms that receive government R&D subsidies increase sustainability. This means that firms that receive government R&D subsidies based on taxes go beyond simply pursuing private profit and practice sustainable management through Environmental, Social and Governance and corporate social responsibility, and have a positive impact on society. Second, in the case of firms that received government R&D subsidies, the higher the sales growth rate or firm value, the more positively related to corporate sustainability compared to firms that did not receive government R&D subsidies. This means that when a firm that receives government R&D subsidies increases its performance and growth potential, its financial and economic competitiveness is satisfied, sustainability increases, and it has a positive ripple effect on society and the environment. Third, as a result of analysis by type of R&D, among firms that received government R&D subsidies, only firms in the experimental development increase sustainability. This means that in the case of firms in the experimental development, some of the R&D has already been achieved, or the improved results have materialized, resolving some of the uncertainty, increasing sustainability, and playing a positive role in society. While existing studies have focused on the impact of government R&D subsidies on corporate R&D investment, this study provides a contribution in that it confirms the positive effect of government R&D subsidies on sustainability through Environmental, Social and Governance and corporate social responsibility. Key Words 기업의 사회적 책임, 정부 연구개발보조금, 정부 보조금, 지속가능경영, 지속가능성, ESG, corporate sustainability management, corporate social responsibility, CSR, environmental, social and governance, government R&D subsidies, government subsidies, sustainability
After the Adoption of the K-IFRS Why should Information Users be Interested in ‘Other’ Accounts?: Focusing on ‘Other’ Accounts Collected through Business Report Web Crawling and Discriminatory Using by Corporation Size K-IFRS 도입 이후 정보이용자는 왜 ‘기타’ 계정과목에 관심을 가져야 하는가?: 사업보고서 웹 크롤링을 통해 수집한 ‘기타’ 계정과목과 기업 규모별 차별적 사용유인을 중심으로 우혜진 Hye-jin Wu , 홍영은 Yeung-eun Hong 49(2) 149-184, 2024 Title After the Adoption of the K-IFRS Why should Information Users be Interested in ‘Other’ Accounts?: Focusing on ‘Other’ Accounts Collected through Business Report Web Crawling and Discriminatory Using by Corporation Size K-IFRS 도입 이후 정보이용자는 왜 ‘기타’ 계정과목에 관심을 가져야 하는가?: 사업보고서 웹 크롤링을 통해 수집한 ‘기타’ 계정과목과 기업 규모별 차별적 사용유인을 중심으로 우혜진 Hye-jin Wu , 홍영은 Yeung-eun Hong DOI: KAR Vol.49(No.2) 149-184, 2024 Abstract In spite of the possibility of the ‘Other’ accounts having a significant impact on the financial decision-making process of the information users who use the body of financial statements, there is no research on this. In particular, as after the adoption of K-IFRS did manager’s discretion over financial statement presentation expand, it has become more important to pay attention to the use of the ‘Other’ accounts. The purpose of this study is to look into how the use of ‘Other’ accounts has changed since the adoption of K-IFRS. Specifically, K-IFRS prescribes minimum rules for the accounts that have to be presented in the statement of financial position and allows for manager’s discretion in many areas regarding the statement. Accordingly, the necessity of integrating many accounts previously used in K-GAAP has increased since the adoption of K-IFRS, and it is expected that the utilization of ‘Other’ accounts would be increasing as well. The empirical analysis shows that the number and the amount of ‘Other’ accounts have increased since K-IFRS adoption. Furthermore, after the adoption of K-IFRS, we looked at whether the use of ‘other’ accounts differ depending on the size of the corporation, and found that the larger the company, the more ‘Other’ accounts are used for accounting choices to reduce political costs. It is the first study to individual account called ‘other’ accounts, based on the results of this study, it is worthwhile that it brought out take a ways regarding why it is important that information users should carefully look at ‘Other’ accounts. Key Words ‘기타’ 계정과목, K-IFRS, 기업 규모, 사업보고서 웹 크롤링, ‘Other’ accounts, Korean International Financial Reporting Standards, K-IFRS, corporation size, business report web crawling