ABSTRACT

In this paper, we examine whether requirements to disclose audited financial statements enhance financial reporting quality of privately held firms. Unlike U.S. private firms, private corporations in Korea are required to prepare and disclose audited financial statements. While limited companies, another type of Korean private firms, are almost identical to private corporations in economic substance, they are exempt from reporting requirements to disclose audited financial statements. Using this unique institutional environment in Korea for the period of 2007–2012, we investigate the effect of audit and disclosure requirements on financial reporting quality and find that such requirements enhance financial reporting quality of private companies. Our findings shed light on the economic consequences of mandatory disclosure of audited financial statements and should be of interest to academics and regulators as we evidence the effects of audit and disclosure requirements on financial reporting quality outside of public firms.

摘要

在本文中，我们研究了披露经审计财务报表的要求是否提高了私营公司的财务报告质量。与美国私营公司不同，韩国的私营公司需要编制和披露经审计的财务报表。虽然有限责任公司是韩国私营公司的另一种类型，但在经济实质上与私营公司几乎相同，但它们免于披露经审计财务报表的报告要求。利用 2007-2012 年韩国独特的制度环境，我们调查了审计和披露要求对财务报告质量的影响，发现这些要求提高了私营公司的财务报告质量。