壹緒論 (Chang and Hong, 2000; Khanna and Palepu, 2000) (Williamson, 1975) a 2013b

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1 臺大管理論叢 2018/ DOI: /NTUMR _28(2).0002 集團企業營業活動外關係人交易對盈餘持續性之影響 : 委託同一會計師事務所查核財務報表之效果 The Impact of Non-Operating Related Party Transactions by Affiliated Business Groups on Earnings Persistence: The Effect of Audits from the Same CPA Firm 方俊儒 / Chun-Ju Fang, Associate Professor, Department of Accounting, National Changhua University of Education 張瑞當 / Ruey-Dang Chang, Professor, Department of Accounting, National Chung Hsing University Received 2014/9 Final revision received 2015/12 摘要關鍵字 Abstract Related party transactions are conducted between components within an affiliated business group and these transactions in the normal course of operations are beneficial for the improvement of the operating performance of the group. However, abnormal related party transactions can be used by managers of the group to manipulate financial statements. If auditors of the group can better understand the content and characteristics of related party transactions, then they can determine the rationality of the transactions and further inhibit improper transactions more accurately. The findings of this study indicate that most components of an affiliated business group are audited by auditors from different CPA firms that do not fully understand the nature of related party transactions. As such, affiliated business groups may conduct related party transactions by means of nonoperating activities, which could decrease earnings persistence. Yet, when components of the affiliated business group are audited by the same firm, as opposed to being audited by different firms, earnings persistence would not be decreased. It is noteworthy that the results have to do with the significance of the companies under discussion for the following: either the CPA firm conducting the audits is big or the affiliated business group itself is big. Keywords affiliated business group, earnings persistence, non-operating related party transactions 33

2 壹緒論 (Chang and Hong, 2000; Khanna and Palepu, 2000) (Williamson, 1975) a 2013b

3 臺大管理論叢 28 2 (Chen, Cheng, and Xiao, 2011) 貳文獻回顧與假說發展一集團企業之關係人交易 (Pizzo, 2013) (Williamson, 1975) Chang and Hong (2000) 35

4 (Chang and Hong, 2000) 2009 (Gopalan and Jayaraman, 2012) (Iatridis and Alexakis, 2012) Chen et al. (2011) A B 二集團企業查核型態與關係人交易之關係 a (Branson and Breesch, 2004) (Benston, 1985)

5 臺大管理論叢 28 2 (Boone, Khurana, and Raman, 2011) 三集團企業查核型態關係人交易與盈餘持續性之關係 Dechow, Ge, and Schrand (2010) (Book-tax Differences) Hanlon (2005) Chen and Yuan (2004) Haw, Qi, Wu, and Wu (2005) % Haw et al. (2005) 假說 1: 整體而言, 集團企業之營業活動外關係人交易會降低盈餘持續性 37

6 2 假說 2: 集團企業委託同一事務所查核時, 相較於委託不同事務所查核, 其營業活動外關係人交易較不會降低盈餘的持續性 Reynolds and Francis (2000) Chi, Douthett, and Lisic (2012) 2a 假說 2a: 集團企業委託同一事務所查核時, 其營業活動外關係人交易較不會降低盈餘持續性之效果, 會因為是否委託大型事務所查核而不同 2 38

7 臺大管理論叢 b 假說 2b: 集團企業委託同一事務所查核時, 其營業活動外關係人交易較不會降低盈餘持續性之效果, 會因為該集團企業是否屬於大型集團企業而不同參研究方法一樣本資料來源 (Taiwan Economic Journal; TEJ) TEJ TEJ TEJ , %

8 二變數衡量 ( 一 ) 關係人交易 ( 二 ) 集團企業規模 5 ( 三 ) 盈餘持續性 Atwood, Drake, and Myers (2010) Lee and Yoon (2012) Doyle, Lundholm, and Soliman (2003) Lee and Yoon (2012) (Atwood et al., 2010) Atwood et al. (2010) (1) FEARN t+1 = β 0 +β 1 EARN t +β 2 RPT t +β 3 EARN_RPT t +β 4 SIZE t +β 5 EARN_SIZE t + β 6 GROWTH t +β 7 EARN_GROWTH t +β 8 CAP t +β 9 EARN_CAP t + β 10 LOSS t +β 11 EARN_LOSS t +δσyear+ρσearn_year+γσindus+ ησearn_indus (1) 5 40

9 臺大管理論叢 28 2 FEARN t+1 = t+1 EARN t = t RPT t = t 1 0 EARN_RPT t = t EARN RPT SIZE t = t EARN_SIZE t = t EARN SIZE GROWTH t = t EARN_GROWTH t = t EARN GROWTH CAP t = t EARN_CAP t = t EARN CAP LOSS t = t 1 0 EARN_LOSS t = t EARN LOSS Year = EARN_Year = Indus = EARN_Indus = 1% 99% winsorize 1 集團企業之組成個體 ( 已經排除僅有一個組成個體之集團企業樣本 ) 14,792 金融證券壽險業 (1,955) 集團企業營業活動外關係人交易資料不全者 (3,107) 依變數自變數控制變數資料不全者 (1,385) 合計 8,345 41

10 2 產業代碼產業名稱個數百分比 01 水泥食品塑膠紡織電機機械電器電纜造紙鋼鐵橡膠汽車建材營造航運觀光貿易百貨其他化學生技醫療油電燃氣半導體 1, 電腦及週邊設備光電通訊網路電子零組件電子通路資訊服務其他電子文化創意合計 8,

11 臺大管理論叢 28 2 肆實證結果分析一敘述性統計值 % (3106/( )) 82.8% 85.71% 3 集團企業委託不同事務所查核集團企業委託同一事務所查核大型事務所查核 4,338(82.80%) 2,662(85.71%) 非大型事務所查核 901(17.20%) 444(14.29%) 合計 5,239 3, % 4.8% 78% % 5.8% 5.8% 21.4% 4 平均值中位數標準差最小值最大值 FEARN EARN RPT SIZE GROWTH CAP LOSS 註 : 各變數之定義同迴歸模式 (1) 43

12 二相關係數 5 三迴歸分析 6 (Lee and Yoon, 2012) 1 Lee and Yoon (2012) Doyle et al. (2003) Lee and Yoon (2012) Lee and Yoon (2012) Atwood et al. (2010) 44

13 臺大管理論叢 (n = 8345) (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (1) FEARN (2) EARN (3) RPT (0.479) (0.035) (4) EARN_RPT (5) SIZE (0.931) (6) EARN_SIZE (7) GROWTH (0.010) (0.015) (0.311) (0.001) (0.014) (8) EARN_GROWTH (0.068) (0.690) (9) CAP (0.165) (0.021) (0.145) (0.484) (0.641) (10) EARN_CAP (0.001) (0.611) (0.516) (11) LOSS (0.009) (0.008) (12) EARN_LOSS 各變數之定義同迴歸模式 (1), 括號內為雙尾檢定 P 值 45

14 6 FEARN t+1 = β 0 +β 1 EARN t +β 2 RPT t +β 3 EARN_RPT t +β 4 SIZE t +β 5 EARN_SIZE t +β 6 GROWTH t + β 7 EARN_GROWTH t +β 8 CAP t +β 9 EARN_CAP t +β 10 LOSS t +β 11 EARN_LOSS t +δσyear+ ρσearn_year+γσindus+ησearn_indus 變數係數 P 值常數項 EARN RPT EARN_RPT SIZE EARN_SIZE GROWTH EARN_GROWTH CAP EARN_CAP LOSS EARN_LOSS Year Effects Included Industry Effects Included 樣本數 8,345 Adjusted R 註 : 各變數之定義同迴歸模式 (1) 7 (1) (2) Chow (1960) Chow test (1) (2) F 7.56 P (1) (2) 46

15 臺大管理論叢 28 2 Chow test 2 (3) Chow test (1) (3) F 4.56 P (4) Chow test (1) (4) F 0.05 P a 8 (1) (2) (1) (2) Chow test (1) (2) F 8.67 P (3) (4) (3) 47

16 7 FEARN t+1 = β 0 +β 1 EARN t +β 2 RPT t +β 3 EARN_RPT t +β 4 SIZE t +β 5 EARN_SIZE t +β 6 GROWTH t +β 7 EARN_GROWTH t +β 8 CAP t +β 9 EARN_CAP t + β 10 LOSS t +β 11 EARN_LOSS t +δσyear+ρσearn_year+γσindus+ησearn_indus (1) 集團企業委託不同事務所查核 (2) 集團企業委託同一事務所查核 (3) 集團企業委託同一大型事務所查核 (4) 集團企業委託同一非大型事務所查核變數係數 P 值係數 P 值係數 P 值係數 P 值常數項 EARN RPT EARN_RPT SIZE EARN_SIZE GROWTH EARN_GROWTH CAP EARN_CAP LOSS EARN_LOSS Year Effects Included Included Included Included Industry Effects Included Included Included Included 樣本數 5,239 3,106 2, Adjusted R 各變數之定義同迴歸模式 (1),P 值為雙尾檢定值 48

17 臺大管理論叢 FEARN t+1 = β 0 +β 1 EARN t +β 2 RPT t +β 3 EARN_RPT t +β 4 SIZE t +β 5 EARN_SIZE t +β 6 GROWTH t +β 7 EARN_GROWTH t +β 8 CAP t +β 9 EARN_CAP t + β 10 LOSS t +β 11 EARN_LOSS t +δσyear+ρσearn_year+γσindus+ησearn_indus 大型集團企業非大型集團企業 (1) 集團企業委託不同事務所查核 (2) 集團企業委託同一事務所查核 (3) 集團企業委託不同事務所查核 (4) 集團企業委託同一事務所查核變數係數 P 值係數 P 值係數 P 值係數 P 值常數項 EARN RPT EARN_RPT SIZE EARN_SIZE GROWTH EARN_GROWTH CAP EARN_CAP LOSS EARN_LOSS Year Effects Included Included Included Included Industry Effects Included Included Included Included 樣本數 3, ,039 2,333 Adjusted R 各變數之定義同迴歸模式 (1),P 值為雙尾檢定值 49

18 (4) Chow test (3) (4) F 1.57 P b 四敏感與額外性檢定 A A 50

19 臺大管理論叢 28 2 伍結論與建議

20 The Impact of Non-Operating Related Party Transactions by Affiliated Business Groups on Earnings Persistence: The Effect of Audits from the Same CPA Firm Chun-Ju Fang, Associate Professor, Department of Accounting, National Changhua University of Education Ruey-Dang Chang, Professor, Department of Accounting, National Chung Hsing University 1. Purpose In pursuit of the overall effect, related party transactions are a common method used by components of affiliated business groups (Chang and Hong, 2000; Khanna and Palepu, 2000). The main reason is that the related party transactions are commonly seen in the affiliated business group as a high level of familiarity and trust among the components, which can lower the transaction costs that result from information asymmetry (Williamson, 1975). Therefore, related party transactions are an important factor in raising corporate operating efficiency. However, affiliated business groups are extended from family members, interlocking shareholders, sit on the boards of other groups, or supervisors are common among the components. If groups controlling shareholders intend to misappropriate or embezzle corporate funds, then related party transactions could be a likely tool for the group. The group s auditor is unable to ask the affiliated business group to reduce related party transactions to avoid an audit risk. It is essential for auditors of the group to ensure and raise the audit quality while not negatively affecting or interfering with normal operations of related party transactions. This study examines whether, by hiring the same auditing firm, auditors of the affiliated business group have a better understanding of the content and characteristics of the related party transactions, i.e., whether they are able to determine the rationality of such transactions and then further lower and inhibit use of improper related party transactions to manipulate financial reporting. Most of extant literature regarding the relationship between related party transactions and earnings management has taken a viewpoint on the controlling shareholders of the affiliated business groups conduct the related party transactions for personal gain. It was found that the more related party transactions taken place among the business groups, the more earnings management was conducted. However, related party transactions can be conducted to improve the efficiency of transactions among the components of the group and do not need to have the purpose of earnings manipulation. Also, the auditors of the 52

21 臺大管理論叢 28 2 group are unlikely to stop related party transactions in the group simply because these transactions may bring about lawsuits. More importantly, the identification of and monitoring for any abnormal related party transactions should be watched appropriately. This study finds that audit quality of the firm that audits the group is essential in determining whether related party transactions affect earning persistence. In other words, whether the auditor can be effectively monitoring related party transactions is an important factor of the group s conduct with related party transactions to manipulate earnings. The results of this study complement the current literature with regard to the discussion of related party transactions use for the manipulation of earnings as well as to provide implications for policy regulations for auditing group financial statements. 2. Research Design This study obtains empirical data of the publicly traded companies in Taiwan from the Taiwan Economical Journal data bank from 1996 to 2011, for a total of 17 years. We excluded groups with only one component; industries with special practices and characteristics such as banking, securities, and insurance companies; companies with incomplete information on related party transactions; and samples with incomplete variables. There are 8,345 sample companies (components) available for analysis. Furthermore, this study discusses the effects related party transactions have on earnings persistence to determine whether affiliated business groups have utilized improper related party transactions to manipulate financial reporting. When a group s auditor (dis) inhibits the group from manipulating earnings via inappropriate related party transactions, such transactions will (not) lower earnings persistence. This study investigates whether a group has possessed related party transactions by the existence of revenues or costs from related party transactions outside regular business operations. 3. Findings This study found conclusively that most affiliated business groups still engage different audit firms and auditors may not fully understand the content and characteristics of the related party transactions. Thus, they are not able to effectively inhibit the group from manipulating earnings reporting via related party transactions. Hence, related party transactions of the group have the ability to decrease earnings persistence. Yet, when a 53

22 group hires the same audit firm, due to the firm s better understanding of the content and characteristics of the related party transactions, auditors have a higher chance of inhibiting them from utilizing inappropriate related party transactions to manipulate earnings on financial reports. In this context, the group is more likely to conduct normal related party transactions that will not lower earnings persistence. However, when a group hires different audit firms, they may not fully understand the content and characteristics of the related part transactions, auditors have a lower chance to control the usage of improper related party transactions to manipulate financial earnings. Therefore, such usage by groups could lower earnings persistence. Yet, the above results are limited to large business groups or when the audit firm is big. The possible reason that the above result is limited to large business groups is the lower complexity of the related party transactions of small business groups. Even if small business groups engaged different audit firms, auditors still can inhibit the group s manipulation of financial reporting through abnormal related party transactions. Thus, there is no significant difference between engaging with the same firm and with different firms for small business groups. Furthermore, the possible reason that the above result is limited to big audit firms is when the business group engages with a smaller audit firm, the effect of the related party transactions that auditors are able to reduce is restricted because of the economic dependence on the group and the scarcity of resources the firm can invest in the engagement. Thus, when compared to the components of the group audited by different audit firms, if the components of the group are audited by a smaller firm, there is no significant difference in how related party transactions affect earnings persistence. 4. Limitation A number of affiliated business groups in Taiwan have components that include banking, securities, and insurance industries. However, due to the special properties of these industries, their methods of variable measurement are different from those used in this study for regular industries. Thus, they are excluded from this study. This is a limitation for this study. Furthermore, while selecting companies as samples, this study excluded companies with incomplete variables, leaving only those with complete information for analysis. This is another limitation of this study. 54

23 臺大管理論叢 Conclusion Currently most affiliated business groups are still engaged with different audit firms for various components, which causes difficulty for the group s auditors to inhibit improperly related party transactions. Wholly speaking, affiliated business groups in Taiwan are able to utilize related party transactions to manipulate earnings. Despite the release of Statement No. 54 of Auditing Standard: Special Consideration with Regards to the Audit of Group Financial Statements, which clearly requires that the group s auditor in-charge be informed of every component in the group as well as to be fully responsible for the group s financial statements, this statement does not require that all components of the group should hire the same audit firm. The empirical results of this study indicate that when every component in a group hires the same audit firm, the possibility of the group utilizing improper related party transactions to manipulate financial earnings will be lowered. In addition, consolidated financial statements should be prepared beginning in 2013 in Taiwan, which may reduce incentives for groups to manipulate earnings through abnormally related party transactions. If auditors of the group would like to accurately audit consolidated financial statements, they must determine whether the investing company has controlling power over the invested company. Based on the No. 27 of the International Accounting Standards related to the requirement of consolidated financial statements, if the components of the group are audited by the same audit firm, auditors can correctly decide where there is controlling power among the components and the accuracy of financial reporting of the group can be enhanced. Therefore, based on the results of this study, authorities should consider requiring a business group to engage with the same audit firm and encourage them to engage with big audit firms. By doing so, the audit quality of the group may be enhanced. 55

24 參考文獻 2013a (Jiang, Ming-Zhe. 2013a. Introduction of the Statement of Auditing Standards No. 54: Special considerations for auditing the group financial statements: I. Commercial Report, 42: ) 2013b (Jiang, Ming-Zhe. 2013b. Introduction of the Statement of Auditing Standards No. 54: Special considerations for auditing the group financial statements: II. Commercial Report, 43: ) (Yu, Jia-Hua Statement of Auditing Standards No. 54: Special considerations for auditing the group financial statements. Accounting Research Monthly, 338: ) (Fan, Hung-Shu, Lin, Yan-Ting, and Chen, Ching-Lung The effect of real earnings management on the valuerelevance of accounting information. NTU Management Review, 25 (3): ) (Chang, Ruey- Dang, Fang, Chun-Ju, and Shen, Wen-Hua Earnings management of the affiliated business groups: The effect of whether being audited by the same CPA firm. Management Review, 27 (2): ) (Chen, Ching-Lung, Chang, Chuang-Chang, and Weng, Pei-Yu Qualified foreign institutional investors and the earnings informativeness of income smoothing. NTU Management Review, 27 (4): 1-42.) (Yeh, Yin-Hua Family controlled groups and return covariation in Taiwan stock market. NTU Management Review, 9 (1): ) 56

25 臺大管理論叢 (Liao, Hsiu-Mei, and Chi, Wu-Chun Audit quality during the first year of mandatory audit-partner rotation. NTU Management Review, 25 (1): ) (Liu, Chia-Wen, Wang, Tay- Chang, and Lai, Shin-Tsang Litigation risk and large audit firms acceptable level of clients financial risk. NTU Management Review, 20 (1): 1-40.) S (Sue, Shu-Hui, Lu, Chien-Ju, and Chin, Chen-Lung The association between family firms and earnings quality: Ownership, management and control. NTU Management Review, 19 (S2): ) Atwood, T. J., Drake, M. S., and Myers, L. A Book-tax conformity, earnings persistence and the association between earnings future cash flows. Journal of Accounting and Economics, 50 (1): Benston, G. J The market for public accounting services: Demand, supply and regulation. Journal of Accounting and Public Policy, 4 (1): Boone, J. P., Khurana, I. K., and Raman, K. K Litigation risk and abnormal accruals. Auditing: A Journal of Practice & Theory, 30 (2): Branson, J., and Breesch, D Referral as a determining factor for changing auditors in the Belgian auditing market: An empirical study. The International Journal of Accounting, 39 (3): Chang, S. J., and Hong, J Economic performance of group-affiliated companies in Korea: Intragroup resource sharing and internal business transactions. Academy of Management Journal, 43 (3): Chen, J. J., Cheng, P., and Xiao, X Related party transactions as a source of earnings management. Applied Financial Economics, 21 (3): Chen, K. C. W., and Yuan, H Earnings management and capital resource allocation: Evidence from China s accounting-based regulation of rights issues. The Accounting Review, 79 (3): Chi, W., Douthett, E. B. Jr., and Lisic, L. L Client importance and audit partner independence. Journal of Accounting and Public Policy, 31 (3):

26 Chow, G. C Tests of equality between sets of coefficients in two linear regressions. Econometrica, 28 (3): Dechow, P., Ge, W., and Schrand, C Understanding earnings quality: A review of the proxies, their determinants and their consequences. Journal of Accounting and Economics, 50 (2-3): Doyle, J. T., Lundholm, R. J., and Soliman, M. T The predictive value of expenses excluded from pro forma earnings. Review of Accounting Studies, 8 (2-3): Gopalan, R., and Jayaraman, S Private control benefits and earnings management: Evidence from insider controlled firms. Journal of Accounting Research, 50 (1): Hanlon, M The persistence and pricing of earnings, accruals, and cash flows when firms have large book-tax differences. The Accounting Review, 80 (1): Haw, I. M., Qi, D., Wu, D. H., and Wu, W Market consequences of earnings management in response to security regulations in China. Contemporary Accounting Research, 22 (1): Iatridis, G., and Alexakis, P Evidence of voluntary accounting disclosure in the Athens stock market. Review of Accounting and Finance, 11 (1): Khanna, T., and Palepu, K Is group affiliation profitable in emerging markets? An analysis of diversified India business groups. The Journal of Finance, 55 (2): Lee, C., and Yoon, S. W The effects of goodwill accounting on informativeness of earnings: Evidence from earnings persistence and earnings ability to predict future cash flows. Journal of Accounting and Finance, 12 (3): Pizzo, M Related party transactions under a contingency perspective. Journal of Management and Governance, 17 (2): Reynolds, J. K., and Francis, J. R Does size matter? The influence of large clients on office-level auditor reporting decisions. Journal of Accounting and Economics, 30 (3): Williamson, O. E Markets and Hierarchies: Analysis and Antitrust Implications: A Study in the Economics of Internal Organization. New York, NY: The Free Press. 58

27 臺大管理論叢 28 2 作者簡介 Asia-Pacific Journal of Accounting & Economics * Information & Management Asia Pacific Journal of Management Asia-Pacific Journal of Accounting & Economics * fcj@cc.ncue.edu.tw 59

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Myers Majluf 1984 Lu Putnam R&D R&D R&D R&D

Myers Majluf 1984 Lu Putnam R&D R&D R&D R&D 2018 1 156 1 2 2 1. 233030 2. 233030 2005 ~ 2015 A F830. 2 A 1008-2506 2018 01-0015-12 1 2015 1 2017-07-18 71540004 BBSLDQDKT2017B02 1990-1993 - 1964-1 15 2018 1 2025 2015 1 2011 2 + Myers Majluf 1984

壹 緒論 (Chang and Hong, 2000; Khanna and Palepu, 2000) (Williamson, 1975) a 2013b

壹緒論 (Chang and Hong, 2000; Khanna and Palepu, 2000) (Williamson, 1975) a 2013b