• Journal of Korean Society of Industrial and Systems Engineering
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• v.28 no.1
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• pp.105-113
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• 2005

I investigate whether the efficient ratios used as the proxies of the agency costs maintained by Ang et al.(2000) is significant. Utilizing a sample of 77 manufacturing companies listed on the KOSDAQ from the TS2000 of the KSDA, The results are as follows. Agency costs are found to be decreasing with the ownership share of controlling shareholders and accounting performance becomes higher. But firm value measured by Tobin's Q ratio becomes lower according as the ownership of the controlling shareholders increases. If agency costs decrease in proportion to controlling shareholder's share, firm value should be higher according to the agency theory by Jensen and Meckling(I976). But the results of the empirical test of this study are inconsistent with Jensen and Meckling's(1976). Therefore the following study on the more useful proxies stand for agency costs should be needed.

• Asia pacific journal of information systems
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• v.25 no.1
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• pp.61-81
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• 2015

Investment in research and development (R&D) is critical in the information technology (IT) firms, where newer and better technology is a quintessential goal that directly affects innovation and competitive advantage. This study investigates how R&D investment influences firm performance and value, and how the effect of R&D investment differs between IT hardware and software firms. We also analyze the relationship between firm age and R&D investment in order to identify learning effects on continuous R&D investment. The empirical investigation in this study, based on longitudinal archival data from 2001 to 2010, found a significant effect of R&D investment on firm performance in IT firms. Further, this study demonstrates causal relationship between firm age, and verifies that learning effects are present in R&D investment. Moreover, the results are found to differ between IT hardware and IT software firms.

• Journal of Korea Trade
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• v.25 no.7
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• pp.19-40
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• 2021

Purpose - This paper's purpose is to investigate how foreign ownership and innovation affect firm value. Design/methodology - Firm innovation is defined as operational efficiency, which is calculated by adopting data envelopment analysis (DEA). Additionally, R&D intensity is included as a measure of innovation in the analysis. We used firm-level data from manufacturing companies in Korea. The sample comprised 3,753 firm-year observations for every year in the period 2003-2017. Findings - We found that foreign ownership and innovation are positively related to firm value (Tobin's Q). Foreign ownership moderates innovation's contribution to firm value, implying that foreign ownership may enhance the value relevance of firm innovation. In addition, we found that firm innovation partially mediates the relationship between foreign ownership and firm value. Originality/value - This highlights the important role of foreign investors' monitoring; wherein foreign investors enhance firm value by facilitating firm innovation. Our results suggest that foreign ownership can be crucial for innovation and may serve to address weak ownership structures.

• Asia Marketing Journal
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• v.20 no.1
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• pp.1-21
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• 2018

An increasing number of studies have examined the effects of corporate social responsibility (CSR) activities on corporate financial performance (CFP) in the service industry. However, the extant literature does not provide comprehensive insights into the conditions on which the CSR-CFP link relies. In this study, firms' marketing communication capability (MCC) is introduced as an important contingency variable, which determines the effects of CSR on the corporate financial performance, in the context of restaurant businesses. Multiple year data on the spending of public restaurant chains on different media are collected, and MCC is subsequently measured using the data envelope analysis. Then, a test is conducted to prove whether MCC moderates the relationship between CSR and firm financial performance. The empirical results support the hypothesis that MCC strengthens the effect of CSR on CFP. Through the findings, this research provides several interesting and important implications to the literature and managers of service firms.

• Asia Marketing Journal
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• v.18 no.4
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• pp.51-76
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• 2017

Although much attention has been paid to customer satisfaction (CS) as a leading indicator of firm performance, few studies have investigated the role of CS distribution across individual customers. With 10 years of National Customer Satisfaction Index (NCSI) data in Korea, we examine the relationship between the variance of CS and key corporate performance measures such as revenue, profit, Tobin's q, and stock return. There are three main findings. First, we confirm the findings of previous studies that the average CS for a firm is related to the firm's economic performance. Second, we find a moderating effect of CS variance such that the relationship between the level of CS and firm performance is attenuated by the variance of CS. Finally, the variance of CS is found to directly affect firm performance over and above the CS level effect. More specifically, the variance decreases sales and stock return.

• The Korean Journal of Financial Management
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• v.24 no.4
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• pp.45-73
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• 2007

The empirical results are summarized as follows : First, In relation to effects of ownership structure on firm value, there is the non-linear relationship between major(and foreign) shareholder's holdings and firm value. So the results(the compromise hypothesis) by prior researches(Morck et al. 1988 and so forth) is supported. However Institutional shareholder's holdings do not show the significant results. Second, In relation to effects of outside directors on firm value, equally the results of prior researches(Vafeas 2000, Choi et al. 2004), the higher the ratio of outside directors in the board, the higher firm value. Also there is the non-linear relationship between outside directors ratio and firm value. Furthermore, the higher the possibility of outside directors election in the board, the higher the relationship between ownership structure and firm value. As the economic importance of KOSDAQ is more increase, the researches of KOSDAQ should be more realized.

• The Korean Journal of Financial Management
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• v.23 no.1
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• pp.69-100
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• 2006

We examine the effect of controlling shareholders ownership structure and related-party transactions(hereafter 'RPT') of publicly traded companies on their firm values during the post-IMF period. In the multivariate regression analysis using control variables such as firm size, capital structure, investment, dividend, profitability and industry dummy that might affect firm values, we find that there exists a significant negative relation between the controlling shareholders ownership structure and firm values proxied by Tobin's Q, and also find that there is a significant negative relation between RPT and the firm values. Those evidences seem to support the controlling shareholders' expropriation hypothesis. Additionally, we investigate the relation between ownership structure and rim value through the piecewise regression analysis. We find a significant 'inverse' U-shape pattern between the controlling shareholders ownership structure and firm values. This result is quite different from the existing literatures that have usually reported an U-shape pattern. In conclusion, the findings in this study do not support the notion that the ownership concentration to the controlling shareholders does negatively affect the firm values monotonically.

• The Journal of Society for e-Business Studies
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• v.23 no.4
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• pp.63-85
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• 2018

The "About Us" page on the website of a corporation provides information regarding the organization's vision, philosophy, and values. We examine the association between institutional information provided on corporate websites (i.e., the "About Us" section) with present and future financial performance. Utilizing a text mining technique, we analyze the institutional information of S&P500 firms in the year 2016. We conduct a factor analysis including words that are intentionally repeated in the introductory text of corporate websites. The results of the analysis reveal that keywords from this institutional information can be grouped into six factors. We then carry out an ordinary least squares regression analysis to determine the associations between these six factors and present financial performance. The results show that keywords in Factor 2 (those related to Purchasing experience) are positively associated with ROE, a variable representing present financial performance, while keywords in Factor 1 (those related to Note to customers) show a negative relationship with ROE. On the other hand, keywords in Factor 1 have a positive relationship with Tobin's Q, a variable representing future financial performance. These results indicate that there is some relationship between the words used in the institutional information in this section of corporate websites and firms' financial performance. Hence, the institutional information on a website may be a useful indicator of current firm performance and future firm value.

• (The) Korean Journal of Advertising
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• v.27 no.4
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• pp.71-90
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• 2016

Managers of firms often wonder whether advertising expenditure is a mere expense or an investment with foreseeable future returns. When top management makes a decision on the level of advertising expense, it must consider whether an increase in advertising spending will positively affect brand loyalty and the increased brand loyalty will positively affect profitability and firm value. We investigate the industry-specific effects of advertising spending on marketing and the effect of loyalty on financial performances using top companies in Korea, specifically, 184 firms' data from year 1998 to 2014. The empirical results of a fixed effect model indicate that the effects of advertising on customer satisfaction index and loyalty on the firms' financial performance are positive. In service industry, unlike manufacturing industry, advertising has a significantly positive effect Brand Loyalty. In addition, Brand Loyalty had positive impacts on ROA and ROE as profitability index, and Tobin's q, a market-value index. The research results suggest that advertising in service industry should be considered as customer satisfaction investment and the increased Brand Loyalty as a profit for present and a business investment for the future respectively.

• Asia Marketing Journal
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• v.15 no.3
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• pp.53-77
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• 2013

As advertising and promotions are categorized as operating expenses, managers tend to reduce marketing budget to improve their short term profitability. Gauging the value and accountability of marketing spending is therefore considered as a major research priority in marketing. To respond this call, recent studies have documented that financial market reacts positively to a firm's marketing activity or marketing related outcomes such as brand equity and customer satisfaction. However, prior studies focus on the relation of marketing variable and financial market variables. This study suggests a channel about how marketing activity increases firm valuation. Specifically, we propose that a firm's marketing activity increases the level of the firm's product market information and thereby the dispersion in financial analysts' earnings forecasts decreases. With less uncertainty about the firm's future prospect, the firm's managers and shareholders have less information asymmetry, which reduces the firm's cost of capital and thereby increases the valuation of the firm. To our knowledge, this is the first paper to examine how informational benefits can mediate the effect of marketing activity on firm value. To test whether marketing activity contributes to increase in firm value by mitigating information asymmetry, this study employs a longitudinal data which contains 12,824 firm-year observations with 2,337 distinct firms from 1981 to 2006. Firm value is measured by Tobin's Q and one-year-ahead buy-and-hold abnormal return (BHAR). Following prior literature, dispersion in analysts' earnings forecasts is used as a proxy for the information gap between management and shareholders. For model specification, to identify mediating effect, the three-step regression approach is adopted. All models are estimated using Markov chain Monte Carlo (MCMC) methods to test the statistical significance of the mediating effect. The analysis shows that marketing intensity has a significant negative relationship with dispersion in analysts' earnings forecasts. After including the mediator variable about analyst dispersion, the effect of marketing intensity on firm value drops from 1.199 (p < .01) to 1.130 (p < .01) in Tobin's Q model and the same effect drops from .192 (p < .01) to .188 (p < .01) in BHAR model. The results suggest that analysts' forecast dispersion partially accounts for the positive effect of marketing on firm valuation. Additionally, the same analysis was conducted with an alternative dependent variable (forecast accuracy) and a marketing metric (advertising intensity). The analysis supports the robustness of the main results. In sum, the results provide empirical evidence that marketing activity can increase shareholder value by mitigating problem of information asymmetry in the capital market. The findings have important implications for managers. First, managers should be cognizant of the role of marketing activity in providing information to the financial market as well as to the consumer market. Thus, managers should take into account investors' reaction when they design marketing communication messages for reducing the cost of capital. Second, this study shows a channel on how marketing creates shareholder value and highlights the accountability of marketing. In addition to the direct impact of marketing on firm value, an indirect channel by reducing information asymmetry should be considered. Potentially, marketing managers can justify their spending from the perspective of increasing long-term shareholder value.