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Related party transactions and income smoothing: new evidence from Korea

Title
Related party transactions and income smoothing: new evidence from Korea
Authors
Shin, Il HangSohn, Sung KyuPark, Sorah
Ewha Authors
박소라
SCOPUS Author ID
박소라scopus
Issue Date
2021
Journal Title
ASIA-PACIFIC JOURNAL OF ACCOUNTING & ECONOMICS
ISSN
1608-1625JCR Link

2164-2257JCR Link
Citation
ASIA-PACIFIC JOURNAL OF ACCOUNTING & ECONOMICS vol. 28, no. 2, pp. 263 - 280
Keywords
Income smoothingrelated party transactionoperating RPTnon-operating RPTearnings informativeness
Publisher
ROUTLEDGE JOURNALS, TAYLOR &

FRANCIS LTD
Indexed
SSCI; SCOPUS WOS
Document Type
Article
Abstract
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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DOI
10.1080/16081625.2019.1566011
Appears in Collections:
경영대학 > 경영학전공 > Journal papers
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