영업현금흐름 불투명성과 경영자와 감사인간 의견불일치

Operating Cash Flow Opacity and Disagreement Between Management and Auditors

Purpose - The purpose of this study is to analyze the effect of the opacity of operating cash flows on the disagreement between managers and auditors. Specifically, it aims to investigate how the opacity and distortion of operating cash flows influence auditors’ judgments, and how such disagreements affect the overall quality of financial reporting by firm. Design/methodology/approach - The opacity of operating cash flows (UCFO) is measured using expected operating cash flows, derived by estimating firm-specific coefficients based on the Roychowdhury (2006) model. The disagreement between managers and auditors is measured as the absolute difference between pre-audit net income and post-audit net income, following prior research. Findings - The empirical analysis reveals that the higher the opacity of operating cash flows, the greater the disagreement between managers and auditors. This suggests that as information related to operating cash flows becomes more opaque, the likelihood of financial statement distortion increases. Consequently, auditors need to exert more effort to correct such distorted information, leading to a higher level of disagreement between managers and auditors during the audit process. Research implications or Originality - The findings of this study suggest that the greater the opacity of operating cash flows, the higher the likelihood of financial statement distortion. This leads to an increased degree of adjustments made by auditors, as they invest sufficient audit efforts to enhance the reliability of financial reporting, therby increasing the level of disagreement between managers and auditors. This study distinguishes itself from prior research by examining the impact of auditors’ efforts using the opacity of operating cash flows as a proxy for the quality of financial reporting.