• The Journal of the Convergence on Culture Technology
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• v.4 no.1
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• pp.67-73
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• 2018

Financial plight condition firms difficulties accessing external funding, these firms will arrange scarce funds using tax avoidance can be a way of improvement of internal cash flow and internal funds securement. This study is empirical evidence presented the association between free cash flow can be represented for financial condition of firms and using tax avoidance for Kosdaq listed firms. Empirical analysis result, presented plus (+) results the association between free cash flow and tax avoidance. these results are in the previous year free cash flow is large firms purpose of internal cash holdings that increase of tax avoidance in order to minimize of cash outflow are based on tax burden. also interaction effect of free cash flow and debt ratio is presented influence of plus(+) on tax avoidance.

• The Korean Journal of Financial Management
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• v.24 no.1
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• pp.59-83
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• 2007

In this paper, we test empirically free cash flows hypothesis about stock repurchase. The main results of this study can be summarized as follows. First, repurchasing firms do not experience a growth in profitability relative to their peer firms. Second, repurchasing firms experience a contraction in their investment opportunity, and so capital expenditures and cash reserves decline after the repurchase. Third, repurchasing firms experience a decline in systematic risk and investments and in their cost of capital. Fourth, the reduction in profitability and cost of capital are sources of the positive market reaction to the repurchase announcement. And the market reaction to stock repurchase announcements is stronger among those firms that are more likely to overinvest. Conclusively, these results support free cash flows hypothesis. When firms experience a decline in profitability, capital expenditures and cash reserves, systematic risk and cost of capital, they decide to repurchase stocks to reduce free cash flows.

• The Journal of the Korea Contents Association
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• v.20 no.10
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• pp.510-521
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• 2020

Recently, transparency in accounting for medical institutions has been emphasized. However, due to the current system problems and structural limitations, there is a lack of diagnosis on the financial status of domestic hospitals. This study is based on the financial statements per 100 beds of 374 including domestic hospital level to tertiary hospital, and analyzed the Free Cash Flow(FCF) by hospital size from the perspective of Free Cash Flow Hypothesis. After deriving Operating Cash Flow(OCF) through the profit or loss statement of medical institutions, FCFs were analyzed through the prior and current financial statements and OCFs, and the correlation between financial variables was confirmed. According to the analysis, first, hospitals with 160 to 299 beds and 300 beds or more have relatively high FCFs. Second, certified tertiary hospitals, hospitals with less than 160 beds, and general hospitals have negative(-) FCFs. Thus, there's a need to narrow the FCF gap based on the size of the hospital, maintaining an appropriate level of FCF. This study is meaningful in that it was the first FCF analysis based on hospital size. This study is also expected to offer an informative resources in setting differentiated strategies according to the size of medical institutions when establishing new accounting policies in the future.

• Journal of Technology Innovation
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• v.20 no.1
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• pp.45-73
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• 2012

In this paper, we analyse empirically the effects of financial characteristics on the relationship between R&D investment and market value of firms listed on Korea Exchange. The main results of this study can be summarized as follows. Firm size increase the market valuation of R&D investment because it provides economies of scale, easier access to capital market, and R&D cost spreading. Market share also positively effects the relationship between R&D investment and firm value. Alternatively, free cash flow has a negative effect on the relationship between R&D investment and firm value because firms with high free cash flow could be tempted to use the free cash flow to undertake negative NPV projects. The dependence on external finance is a handicap negatively assessed by the market when firms undertake R&D projects due to the higher information asymmetry associated with this kind of project. Labor intensity has a negative effect on the relationship between R&D investment and firm value because the abnormal profits arising from R&D investment are diluted among employees. Capital intensity also has a negative effect on the relationship between R&D investment and firm value due to the greater financial constraints faced by capital intensive firms. In conclusion, several financial characteristics(firm size and market share) positively effect the relationship between R&D investment and firm value, while others(free cash flow, dependence on external finance, labor intensity, and capital intensity) exert a negative effect. Therefore, we conclude that the effectiveness of R&D investment depends on these financial characteristics.

• The Korean Journal of Financial Management
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• v.25 no.2
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• pp.137-164
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• 2008

This paper examines the operating performance of firms that for a four-year period, held more than 15% of their assets in cash and cash equivalents. During next four years, operating performance of firms maintaining high cash persistently is greater than the performance of firms matched by size and industry or firms adopting transitory high cash policy. Furthermore, the effect of persistent cash holdings on operating performance depends on the ownership structure and the level of information asymmetry. Foreign investors deteriorate the operating performance of high cash firms, suggesting that potential M&A and the pressure of excessive dividend reduce the usefulness of cash. The level of information asymmetry enhances the operating performance for the firms adopting persistent high cash policy. It suggests that cash holdings reduce the costly external financing and underinvestment problem for firms with high information asymmetry.

• The Journal of the Korea Contents Association
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• v.9 no.7
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• pp.304-314
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• 2009

A valuation of the most hotels in Korea have been decided by their asset value and influenced by real estate market. On the other hand, most hotels aim to maximize their through generating profit as other enterprise do it. Therefore a valuation of the hotel industry should be decided from calculating in their profit value. This study is tried to find out the relationships of the company value by free cash flow model between accounting index in hotel industry. The results are as follows. First, there is a 25% gap between high level and low level in hotel industry. Second, in the first rate hotels it is meaningful 99% between asset size and liability rate. Third, there is 99% meaningful relationship asset size of the first level and second level hotels and company values.

• Journal of Technology Innovation
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• v.12 no.1
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• pp.49-65
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• 2004

This study investigates the effect of technology outsourcing on the value of the firm in Korea. The result shows that the technology outsourcing in the high growth industries gives positive effects on the value of the firm. The results supports the investment opportunity hypothesis. With respect to the free cash flow hypothesis, this study finds no supporting evidences. The paper concludes that growth is the dominant factor for determining the effect of technology outsourcing on the value of the firm.

• Management & Information Systems Review
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• v.35 no.4
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• pp.79-98
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• 2016

A large number of Chinese enterprises have grown up and become increasingly competitive. Chinese firms have ventured abroad to search for new sources of growth. Overseas mergers and acquisitions of Chinese companies has been developed rapidly through extensive opening policy and active support system by government. The main purpose of this study is to identify the factors that affect the outcomes of overseas mergers and acquisitions made by Chinese firms in recent years, particularly, financial performance of the acquiring firms. This study aims to analyze systematically financial performance and its determinants of Chinese overseas M&A in recent years. This study chooses a sample of 167 overseas mergers and acquisitions in the manufacturing industry in China and the relevant data were collected during the period 2006 to 2012. The data were analyzed by using a multiple regression analysis to identify determinants of corporate performance. We showed that cultural distance, past performance, state ownership, and interaction between cultural distance and past performance. Findings of this study can provide useful guidance to outward Chinese M&A in the future.

• The Korean Journal of Financial Management
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• v.25 no.4
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• pp.25-51
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• 2008

In this paper, we analyse empirically the fixed asset investment smoothing of working capital of firms listed on Korea Securities Market. The main results of this study can be summarized as follows. Firms will seek to lower long-term cost by smoothing fixed asset investment and maintaining stationary investment with working capital. Working capital is not only an important use of fund, but also a source of liquidity that should be used to smooth fixed asset investment relative to cash flow shocks if firms face financial constraints. Working capital investment is more sensitive than fixed asset investment to cash flow fluctuations. If firms face financial constraints, working capital investment will compete with fixed asset investment for the limited pool of available cash flows. So, fixed asset investment will have negative relationship with working capital investment. However, criticism that the positive correlation between cash flows and fixed asset investment could arise simply because cash flows is proxy variable for investment demand. Finally, controlling for the fixed asset investment smoothing effects of working capital results in a much larger estimate of the long run impact of financial constraints. Financial constraints is measured by dividend payout ratio and market access level. Fazzari et al. (1988), Fazzari and Petersen (1993), and Faulkender et al. (2008) emphasize that low dividend firms or market unaccessible firms are more likely to face financial constraints, and rarely make use of new equity issuing. The results from empirical analysis show that financial constraints can be better explained using 'adjustment cost' concept. Specifically, the results show that financial constraints exist and that in order to measure financial constraint effects more succinctly, fixed asset investment smoothing effects with working capital should be considered.

• International Area Studies Review
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• v.21 no.2
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• pp.143-169
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• 2017

This paper empirically examines how capital structure inertia varies across industries and there is different in industries, and whether this fact is explained by product market competition using non-financial firms listed in KOSP market over periods of 1981 to 2015. In empirical test, I find that firms with more competition environment tend to have inertia behavior in making decision of capital structure. This implies that it is explained by debt discipline effect and it is substitution for product market competitions. Also I find that manager tends to take action actively making decision of capital structure when product market competition is low. Also I show that they use debt to constraint the free cash flow. As a result, I conclude that Korean non-financial firms do not have more strong inertia behavior in capital structure rather than U.S. firms. Second, using OLS estimation, inertia effect disappears while there is strong inertia effect in relationship between inertia and product market competition. This result suggests that transaction cost is not key factor in explaining inertia behavior of capital structure.