• Journal of Digital Convergence
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• v.19 no.8
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• pp.161-171
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• 2021

According to the equity home bias theory, foreign investors are considered to have less information than native investors. However, as the economy becomes liberalized and overseas economic innovation has a great influence on the local economy, it is possible for foreign investors to invest as informed traders. This study analyzes whether information on trade amount by nationality has specific characteristics. The findings are summarized as follows. First, the increase in trading by foreign investors has negative effects on stock returns. There is no significant difference in these negative effects by nationality. This means that foreign investors show strong herd behavior regardless of nationality. Second, foreigners' investment activities increase stock price volatility, but the impact is not significant. Third, the behavior of foreign investors is still positive feedback. However, there are signs that positive feedback behavior may be changing, especially for funds from the United States and the Cayman Islands. Finally, tax haven zone funds have different investment strategies than other foreign investors. However, Cayman Islands funds, which are estimated to be closely related to Korea, are different from Luxembourg and Ireland funds. These findings undermine the fundamentals of the equity home bias theory.

• Journal of Korea Trade
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• v.24 no.7
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• pp.38-53
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• 2020

Purpose - A financial crash triggers asset fire sales by foreign investors and, as a consequence, the price of domestic assets severely decreases. Domestic investors take advantage of these low prices by replacing foreign assets with domestic assets, which helps to alleviate the liquidity shock caused by foreigners. However, is the amount of capital retrenchment by domestic investors sufficient to protect the Korean economy from capital stop by foreign investors during financial crisis? This paper answers this question and suggests the implications of this phenomenon for the Korean economy. Design/methodology - We estimate the associations between capital stop and retrenchment and various financial crises such as banking, currency, debt, and inflation crises using the complementary log-log model. Specifically, we use data of gross capital flows to differentiate between the role of foreign and domestic investors in financial markets. Capital stop and retrenchment designate a sharp decrease in gross capital inflows and outflows, respectively. Findings - Capital stop is significantly associated with financial crises, especially currency and debt crises. This implies that increased risk aversion during times of financial turmoil encourages foreign investors to retrench their investments, worsening liquidity shocks. Conversely, capital retrenchment is not significantly associated with such crises. The results show that, although financial crises reduce gross capital outflows, the reduction is not as large as that with capital inflows. Originality/value - The contribution of this paper is threefold. First, this study investigates how domestic investors behave during times of financial distress by studying gross capital flows-not net capital flows. Second, we concentrate on sharp changes in capital flows during crises. Third, we examine the associations between capital stop and retrenchment and financial crises in general, not specific events.

• International Commerce and Information Review
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• v.14 no.2
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• pp.369-387
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• 2012

Throughout intensive negotiations on the KORUS FTA and even after its ratification on March 15, 2012, ISD (Investor-State Dispute Settlement) has been at the center of many controversies within the FTA. Although the original function of the ISD is intended to be a protectional measure for foreign investors, there have been many foreign investors who tried to use the ISD as a tool to attack a government and nullify the public policy demanding tremendous amount of compensation. Many of the NAFTA ISD cases including Ehtyl v. Canada and UPS v. Canada demonstrate such a behavior by foreign investors. It is the right time for Korean government to conduct in depth studies on NAFTA ISD cases because the precedents provide invaluable insights including the legal reasoning by the decision making authorities including ICSID and UNCITRAL. The lessons we would learn from those cases would prepare Korean government for expected ISD claims by foreign investors and enable the government to maximize its efficiency in policy making process under a new international trade environment, the KORUS FTA.

• Korea Trade Review
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• v.45 no.1
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• pp.13-29
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• 2020

With the development of the Internet environment, cross-border crowdfunding has emerged as a novel method to attract foreign investors online. Focusing on 324 South Korea-based crowdfunding projects from Kickstarter, which is a representative cross-border crowdfunding platform, this study explores the trends of South Korea-based funding projects and examines the effects of key determinants on crowdfunding outcomes. Regarding the characteristics of crowdfunding projects, analysis results show that the appropriate goal amount and funding period, sufficient updates of project status, and active communication is critical for success. Additionally, from the perspective of project creators, this research finds that creators need to pay greater attention to writing their detailed biographies. Finally, examining the characteristics of project backers, this study shows that attracting project backers from various countries would be desirable rather than focusing on Korean sponsors from the start.

• International Commerce and Information Review
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• v.14 no.1
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• pp.87-114
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• 2012

The purpose of this paper is to analyze the economic effects of Foreign Direct Investment(FDI) and human capital using VECM in Korea from 1970 to 2009. Empirical results through VECM show that the coefficients of GDP, GFO(gross fixed capital), LAB(total labor), EXO(export), PCDB(public and commercial loan) and FDI have had a positive impact on Korean economic growth. In contrast, the effects of PCDB and FDI were not as significant as the other variables. In particular, the interaction effect, $FDI^*EDU$(the college graduation variable), was more important than that of the FDI alone. However, the coefficient of $FDI^*EDU$ was not so big. Korean government needs to attract more FDI to enhance Korean economic growth rate by the improvement of investment environment. There are a big amount gap between notification FDI and arrival FDI in Korea. So Korean government and companies should actively persuade foreign investors to invest after their investment notification. Also the Korean college authorities should emphasize more on curriculum which adapts to company skill in the field work.