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The purpose of this study is to examine whether the change in accounting standards from the rules-based local GAAP to the principles-based IFRS influences a manager’s opportunistic auditor choice for a favorable audit opinion, opinion shopping (OS) behavior. The authors view that IFRS adopters exploit the flexibility of IFRS to their advantage and search for auditors that are more likely to give clean opinions. However, auditors may refuse to yield to client pressure for OS, because of the greater potential audit risk under principles-based standards.

This study applies a difference-in-differences methodology by using Korean listed firms (i.e. IFRS adopters) as a treatment sample and Korean unlisted firms that do not voluntarily adopt IFRS (i.e. K-GAAP users) as the control sample. OS behavior is measured by the methodology of Lennox (2000).

The results of this study show that the OS behavior of IFRS adopters increases after IFRS adoption compared to that of K-GAAP users. This phenomenon is more prevalent when they are audited by non-Big 4 auditors or when they are economically important to auditors. These suggest that the principles-based IFRS without specific rules increase the scope of OS, and auditors tend to accept OS clients by weighing up its costs and benefits.

This study contributes to the literature on OS by presenting that the approach of accounting standards can be an important influencing factor on a firm’s successful engagement in OS. This finding also provides policy implications for many economies by suggesting mechanisms that can be developed to reduce clients’ opportunistic auditor choices under principles-based accounting standards.

This study aims to examine whether debt financing creates incentives for private firms to engage in earnings management via classification shifting. Especially, the authors examine whether debt-induced financial reporting incentives differ depending on the type of debt (i.e. public bonds versus private loans) and whether such incentives are influenced by the characteristics of external auditors (i.e. initial audits and auditor size).

The study uses data on 93,427 Korean private firms from 2001 to 2016. Classification shifting is measured by the positive correlation between non-core expenses and unexpected core earnings estimated with ordinary least squares.

The empirical analyses reveal that private firms engage in classification shifting as do public firms. Importantly, classification shifting is observed only in private firms that have outstanding debt, but not in private firms without debt. Among debt-financing private firms, classification shifting is more prevalent for firms that issue public debt than for firms that only use private debt. In addition, classification shifting of debt-financing private firms is more successful when they are audited by new auditors that are one of the non-Big 4 firms.

The study provides evidence of classification shifting in private firms, which is novel to the literature. However, the inferences in the study depend on the validity of the model for detecting classification shifting.

This study helps lenders enhance their understanding on the financial reporting behaviors of borrowing firms. The results in this study suggest that lenders should be cautious in using core earnings for their investment decisions.

This study contributes to the literature by providing novel evidence of classification shifting in private firms. In addition, the authors contribute to the literature on debt-induced incentives for financial reporting.

This research aims to examine the relationship between conflict management in the workplace and member satisfaction in work groups at both individual and group levels.

The objectives were achieved by surveying 135 Korean teachers in 28 kindergartens, treating them as small work groups. A multilevel modeling technique was used to examine the impact of conflict management preferences on individual satisfaction with group processes.

For the cooperation style of conflict management, individual‐level preference and group‐level similarity in preference were related positively to individual satisfaction with group processes. Individual‐level preference and group‐level similarity in preference for the avoidance style, however, did not significantly influence individual satisfaction with group processes. It was also found that the positive relationship between individual preference for the cooperation style and satisfaction with group processes was stronger with less variation (i.e. greater similarity) in group‐level preference for the cooperation style and with greater variation (i.e. less similarity) in group‐level preference for the avoidance style. Research limitations/implications – No causality can be established between conflict management style preferences and satisfaction with group processes. Only two styles of conflict management were assessed with a small number of measurement items.

The study shows how useful a multilevel examination of conflict management style preferences and satisfaction with group processes can be for conflict research.