The Effect of Waste Disposal Volume on Earnings Management Behavior in the Construction Waste Disposal Industry - Focused on the Size of the Licensed Storage Capacity and the Location of the Waste Disposal Site -

건설폐기물 기업의 폐기물처리량이 이익조정에 미치는 영향 - 허용보관량 규모와 폐기물처리장 소재지를 중심으로 -

Kim, Dae-Bong;Lee, Hyo-Ik

  • Received : 2015.08.27
  • Accepted : 2015.09.30
  • Published : 2015.10.30


The purpose of this study is to analyse whether the waste disposal volume level in the construction waste disposal industry makes a different effect on earnings management behaviour by size of the licensed storage capacity and by location of the waste disposal site. The empirical results of this study are as follows. First, the waste disposal volume significantly influences earnings management behavior. When it comes to the size of licensed storage capacity in the small-sized capacity firms, the smaller waste disposal volume firms make more aggressive earnings management by using discretionary accruals. On the other hand, in the large-sized capacity firms, more waste disposal volume firms report higher earnings by adjusting more discretionary accruals. Second, the effects of waste disposal volume on the earnings management show different pattern depending on the location of waste disposal site. When the firms are located in the non-capital regions, the smaller waste disposal volume firms report higher earnings by adjusting discretionary accruals as well as by using real activities earnings management. However, the firms located in the capital regions show more aggressive earnings management when they have higher waste disposal volume level.


Construction waste disposal industry;Discretionary accruals adjustment;Real activities earnings management;Waste disposal volume;Size of the licensed storage capacity;Location of the waste disposal site


  1. Korea MOE (Ministry of Environment), 2014: White Paper of Environment.
  2. Kim, C, Y., 2004: A study of recycling methods on construction wastes, M.S's thesis, Myong Ji University, Korea.
  3. Sun, B, K., 2003: Assessment of recycling of construction wastes in Korea and study on its improvement, M.S's thesis, Kwangwoon University, Korea.
  4. Jo, H. W., Jung, I. S., and Lee, C. S., 2009: A study for investigating stakeholder's perception on construction waste, Journal of the Architectural Institute of Korea, Structure Section, 29(1), pp. 733-736.
  5. Jo, J. K., 2014: A Study on the effective recycling system through domestic construction wastes and current circumstance, M.S's thesis, Yeungnam University, Korea.
  6. Jun, M. H., Lee, D. H., 2010: Recycled products of construction waste and development on application technologies, Journal of national institute for disaster prevention, 12(2), pp. 81-109.
  7. Oh, J. H. et al., 2008: Recent status on the recycling of construction waste and research trends - The current situation of recycling technology for waste resources in Korea(4), Journal of Korean Institute Resources Recycling, 17(2), pp. 16-29.
  8. Jo, W. I., 2012: Study on the quality improvement through recycled concrete coarse aggregate production process from construction and demolition waste, M.S's thesis, Konkuk University, Korea.
  9. Shin. B. S., 2006: Study on the problem and recycling of the construction wastes, M.S's thesis, Sogang University, Korea.
  10. Park, W. W. et al., 2008: A study on the economic estimation of the recycling of construction waste, Journal of Korean Institute Resources Recycling, 17(2), pp. 55-62.
  11. Kim, G. Y. et al., 2009: Long-term durability of construction structure and effective use of technology for construction waste, Journal of Korean Institute Resources Recycling, 18(3), pp. 11-19.
  12. Park, S. H., 2014: The patterns of earnings management of delisted companies and the effect of substantial investigation system of delisting on the earnings management, PhD's thesis, Hansung University, Korea.
  13. Jones, J., 1991: Earning management during import relief investigations, Journal of Accounting Research, 29(2), pp. 193-228.
  14. Dechow, P. M., Sloan, R. G., and Sweeney, A. P., 1995: Detecting earnings management, The Accounting Reviews, 70(2), pp. 193-225.
  15. Kothari, S. P., Leone, A. J., and Wasley, C. E., 2005 : Performance matched discretionary accrual measures, Journal of Accounting and Economics, 39, pp. 163-197.
  16. Roychowdhury, S., 2006: Earings management through real activities manipulation, Journal of Accounting and Economics, 42(3), pp. 335-370.
  17. Cohen, D., Dey, A., and Lys, T., 2008: Real and accrual based earning management in the ore and post Sarbanes-Oxley periods, The Accounting Review, 83(3), pp. 757-787.
  18. Dechow, P. M., Kothari, S. P., and Watts, R., 1998: The relation between earning and cash flows, Journal of Accounting and Economics, 25, pp. 133-168.