경영자 투자의사결정에 대한 보수주의의 역할: 비정상적 재무상황을 중심으로

The Role of Conservatism in Managerial Investment Decisions: Focusing on Abnormal Financial Situations

Purpose: This study investigates how firms’ financial conditions influence managerial investment inefficiency, and whether conditional accounting conservatism serves as a moderating mechanism that mitigates such inefficiencies. Research design, data, and methodology: Using a sample of 16,735 firm-year observations from KOSPI and KOSDAQ listed non-financial firms between 2012 and 2024, we measure investment inefficiency based on residuals from expected investment models. Conditional conservatism is quantified using the C-Score proposed by Khan and Watts (2009). We conduct multiple regression analyses to test the moderating effects of conservatism. Results: Firms with high free cash flow are more likely to engage in overinvestment, while financial constraints are associated with underinvestment. Conditional conservatism significantly reduces overinvestment among firms with high internal liquidity and alleviates underinvestment in financially constrained firms by enhancing external financing credibility. Implications: The findings demonstrate that conditional conservatism functions not only as an information quality attribute but also as a governance mechanism influencing managerial decision-making. These results offer practical implications for accounting policy design and capital market regulation, particularly in tailoring financial reporting practices to firms’ financial contexts.