Impact of the Normalization Policy of Public Institutions on Accounting Conservatism

공공기관 정상화 대책이 보수적 회계처리에 미치는 영향

  • Received : 2018.06.25
  • Accepted : 2018.07.05
  • Published : 2018.07.28


This study examines how the implementation of the Normalization policy of public institutions aimed at reducing debt affects accounting conservatism in public corporations. In particular, we analyze the general behavior of accounting conservatism based on debt ratio, and analyze whether the policy has changed this behavior of conservatism. Empirical findings are summarized as following. We show that debt ratios are positively associated with conservatism, consistent with the result for the private corporations. This result means that public corporations increase their conservatism as their debt ratios increase. However, no significant effect is found in this relationship after the implementation of the policy. This finding implies that the implementation of Normalization policy is not a factor that alters the conservative accounting practices of public corporations. This suggests that the recent debt reduction performance of public corporations is irrelevant to conservatism and is the result of the actual process of normalization of management. The results documented in this paper provide an important empirical evidence for evaluating the performance of the government policy at the present time when the debt reduction policy of public institutions is viewed more important than ever.


Debt Ratio;Conservatism;Normalization Policy;Public Corporations;Public Institutions


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