The Study of The Relationship between The Asian Financial Crisis and The Earning Management Behaviors of The Airlines and Shipping Companies

• Main Authors: Ching-hsia Lin, 林菁霞
• Other Authors: Yu-hui Su
• Format: Others
• Language: zh-TW
• Published: 1999
• Online Access: http://ndltd.ncl.edu.tw/handle/50738003431747867930

碩士 === 東吳大學 === 會計學系 === 87 === The Asian Financial Crisis has caused substantial depreciation of New Taiwan Dollar. In view of the large amounts of U.S. Dollar liabilities, complying with the Taiwan Financial Accounting Standards, the airlines and shipping companies will have to recognize a lot of exchange losses. The Taiwanese SEC believed that the airlines and shipping companies would sell their aircraft or boats and lease them back in order to avoid the large exchange losses. This study investigated the relationship between the Asian Financial Crisis and the earning management behaviors of the airlines and shipping companies. The results of this study are as follows: 1- After the Asian Financial Crisis, the selling prices and sales volumes of the airlines and shipping companies have decreased and their operating incomes have diminished apparently. They tended to use discretionary accruals to manage their earnings in 1997. 2- Though they have recognized a lot of exchange losses from their foreign liabilities, they also gain a lot in exchange from their sales made in U.S. Dollar. So the exchange loss or gain really didn’t make significant difference on their overall income. However, some expenditure increased, such as investment losses, so they tended to increase other incomes to cover their losses. 3- According to our study and investigation, we did not find the airlines or shipping companies manage their earnings by sales and lease back transaction. This is because that the NT Dollar exchange depreciation actually makes no significant difference in their earnings, and they have found out other ways to increase their earnings. Besides, the cost for such transaction have increased a lot, because the Taiwan SEC had reinforced audits on such transactions. 4- Before the Asian Financial Crisis, July 96 to June 97, the stock prices of airlines and shipping companies were not affected by the fluctuation of exchange rates, as most companies had taken risk avoiding activities. After the crisis, Oct 97 to June 98, one company’s stock price was affected negatively due to possible poor risk avoiding activities, but another 2 companies’ stock prices were benefited positively. So, the stock prices of airlines and shipping companies were not affected so much by the NT Dollar depreciation after the Asian Financial Crisis. Based on our above study, the Asian Financial Crisis did really affect the earning structures on the financial reports of airlines and shipping companies. However, the recognition of exchange losses didn’t really affect much to the annual earnings of these companies.