Institute of Business and Management
|Keywords:||過度生產行為;負盈餘;股權結構;控制權;現???權;Over-production Behavior;Negative Earnings;Ownership Structure;Control Rights;Cash Flow Rights|
According to Taiwan Generally Accepted Accounting Principles, absorption costing is the required inventory costing method for external financial reporting. Thus, managers can decrease reported cost of goods sold and increase reported income by engaging in excess production. This study aims to investigate whether managers of manufacturing firms resort to excess production (i.e., production in excess of market demand) to avoid reporting annual losses. In light of the fact that the most relevant agency problem may be the one between firms' controlling shareholders and minority shareholders in Taiwan, we also investigate whether managers have higher tendency to engage in opportunistic over-production behavior in order to avoid reporting annual losses when the ultimate controlling shareholder's ownership-control rights diverge. Using a sample of firms listed on the TSE or trading on Taiwan's OTC market from 2000 to 2008, we find that manufacturing firms engage in excess production in order to avoid reporting annual losses, and this phenomenon is more pronounced for manufacturing firms with larger degree of control-ownership disparity.
Journal of Management and Systems
|Appears in Collections:||Journal of Management and System|
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