• Journal of Korea Trade
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• v.26 no.3
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• pp.45-62
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• 2022

Purpose - Using unexpected changes in geopolitical tensions on the Korean peninsula as a quasi-natural experimental setting, we examine whether and how geopolitical risks travel across borders through firm-level imports and exports linkages. We also test whether the effects are driven by either imports or exports and assess whether firms can effectively hedge themselves against geopolitical risks. Design/methodology - We focus on a series of unanticipated geopolitical events taken place in Korea in 2018. Making use of the shocks to geopolitical climate, we identify five milestone events toward peace talks. We employ the event studies methodology. We examine heterogenous firm-level stock price reactions around key event dates depending on firms' exposure to geopolitical risks. As a measure of firms' exposure to geopolitical risks in Korea, we utilize a text-based measure of firm-level trade links. When a firm announces and discusses its purchase of inputs from Korea or sales of outputs to Korea in their annual disclosure filings, we define a firm to have a trade relationship with Korea and have exposure to Korean geopolitical risks. Similarly, we use a measure of a firm's hedging policies based on a firm's textual mention of the use of foreign exchange derivatives in their annual disclosure. Findings - We find that U.S. firms that have direct trade links to Korea gained significantly more value when the intensity of geopolitical risks drops compared to firms without such trade links to Korea. The effects are pronounced for firms purchasing inputs from or selling outputs to Korea. We find that the effectiveness of foreign exchange hedging against geopolitical risks is limited. Originality/value - We document the international transmission of geopolitical uncertainty through trade linkages. Export links as well as import links serve as important nexus of transmission of geopolitical risks across borders. Hedging strategies involving foreign-exchanges derivatives do not seem to insulate firms again geopolitical risks. With the recent movements of localization and reshuffling of the global value chain, our results suggest a significant impact of geopolitical risks in Korea on the construction of the global value chain.

• Industry Promotion Research
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• v.9 no.2
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• pp.29-35
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• 2024

Recently, the Korean financial market has implemented a ban on unleveraged short selling, and leveraged short selling, which involves selling borrowed securities, is called general short selling. This study sought to come up with improvement measures to revitalize short selling from the perspective of individual investors. Short selling refers to selling stocks you do not own in the stock market, predicting that the stock price of the stock will fall, and borrowing stocks to sell them. Based on the results of this study, the short selling market's growth and improvement plans are as follows. First, a plan must be developed to expand short selling opportunities for individual investors. In the domestic short selling market, including KOSPI and KOSDAQ, foreign and institutional participants account for more than 95% of the market, and individual investors are very small. Therefore, its expansion is inevitable. Second, monitoring and punishment for unfair short selling transactions must be strengthened. Representative improvement measures that can minimize the side effects of short selling include strengthening monitoring of unfair trading and short selling, and raising the level of punishment. In addition, measures must be taken to further increase the level of punishment for short selling related to unfair transactions. Third, the short selling reporting and disclosure system needs to be improved. In the case of Korea, short selling transactions are not yet as active as in developed countries, but there is a need to expand the disclosure system to strengthen market transparency in preparation for future short selling transactions becoming more active. In conclusion, it is reported that if short selling regulations are excessively strengthened, losses may occur in terms of price efficiency and market liquidity, which may ultimately have a negative impact on the market. Therefore, policies related to short selling must be made while taking into account the positive aspects of regulatory effects and the negative impact on the market.

• Journal of Distribution Science
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• v.15 no.8
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• pp.47-54
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• 2017

Purpose - According to agency theory, managers have incentives to adjust firm revenues to meet earnings expectations or delay bad news disclosure because of performance-based compensation and their reputation in the market. When the bad news accumulates, stock prices fail to reflect all available information. Thus, market prices of stocks are higher than their intrinsic value. After all, bad news crosses the tipping point, it comes out all at once. That results in stock crashes. Auditors can decrease stock crash risk by reducing agency costs through their informational role. Especially, stock price crash risk is expected to be lower for firms adopting high-quality audits. We focus on distribution and service industry to examine the relation between audit quality and stock price crash risk. Industry specialization and auditor size are used as proxies for auditor quality. Research design, data and methodology - Our sample contains distribution and service industry firms listed in KOSPI and KOSDAQ during a period of 2004-2011. We use a logistic regression to test whether auditor quality influences crash risk. Auditor quality was measured by industry specialist auditor and Big4 / non-Big4 dichotomy. Following the approach in prior researches, we use firm-specific weekly returns to measure crash risk. Firms experiencing at least one stock price crash in a specific week during year are classified as the high risk group. Results - The result of analyzing 429 companies in distribution and service industry is summarized as follows: Above all, it is shown that higher audit quality has a significant negative(-) effect on the crash risk. Crash risk is alleviated for firms audited by industry specialist auditors and Big 4 audit firms. Therefore, our results show that hypotheses are supported. Conclusions - This study is very meaningful as the first study which investigated the effects of high audit quality on stock price crash risk. We provide evidence that high-quality auditors reduce stock price crash risk. Our finding implies that the risk of extreme losses can be reduced through screening of high-quality auditors. Therefore investors and regulators may utilize our findings in their investment and rule making decisions.

• Korea Journal of Hospital Management
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• v.6 no.3
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• pp.69-89
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• 2001

This study is focused that the electronic commerce(EC) on the purchasing section may improve the efficiency and transparency of the hospitals management. After reviewing the purchasing activity of hospitals, I study the introduction, expected effects, and problems of EC. So, I am going to provide basic information for activating EC. The samples are managers of 170 hospitals, which are located on Seoul. As a result of collection this survey, I analyze 79 hospitals. For data analysis, I use $X^2$-test and ANOVA for purchasing management and the relevance of EC according to the level of care. The results of this study are 1. The problems on the management of purchasing section are: firstly, they don't have sufficient time to study market. Secondly, it is difficult to find competitive suppliers. And, lastly, they cannot gather a lot of information about the price of products. 2. There are many answers of the needs on the introduction of B2B. However, some hospitals think they don't need it. But, the most answers are that the EC will be settled within 4 years. So, we can realize that these hospitals are getting interested on the EC. On the other hand, I find that they prefer outside EC companies for the introduction of EC. 3. On the expected effects on EC, first is the effectiveness of the market survey. The next is to collect information of adequate price of products owing to clear transaction, find easier new suppliers and gather useful data. 4. On the external problems of the introduction of EC, there is low credibility related to the security and the weakness of suppliers' information system. Especially, on the Real Transaction Price Payment system, the bigger bed size, the higher understanding on these problems. On the internal problems of the introduction of EC, first is the burden of the introduction of EC and operating cost. Especially, on the burden of the disclosure of revenue source, the smaller bed size, the higher understanding on this problem So, this is a point which deserves my attention statistically. However, this shows relatively little understanding about incomplete the standard of product category and the weak information system of hospital. Through this study, I am going to suggest 3 points for the activation of the introduction of EC on hospitals. 1. The reform of the Real Transaction Price Payment System on medical supplies and materials for medical treatment 2. The establishment of the standard of product category 3. The promotion of information system based on network.

• Asia-Pacific Journal of Business
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• v.14 no.1
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• pp.231-246
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• 2023

Purpose - This study attempts to provide a new theoretical perspective on the quality signaling and its impact on a market under information asymmetry, focusing on how the accuracy and the cost of quality signaling affect sellers' and buyers' profit, suggesting appropriate designs of quality signaling methods which mitigates information asymmetry. Design/methodology/approach - In order to examine the effect of quality signaling on strategic interactions within the market, we establish an analytic model where market outcomes are determined by seller's quality claim and price, and buyers are risk-neutral. By investigating this analytic model through relevant game trees, we find the subgame perfect Nash equilibria of the market and predict related market outcomes based on sellers' quality signaling strategy. Findings - Our analytic model shows counterintuitive results that seller profit will be the lowest with inaccurate quality signaling and the highest with no quality signaling, mostly due to the certification cost. Consequently, sellers should proceed with caution if the quality signaling is less than accurate, as it may backfire. We believe that this is due to the fact that the inaccuracy of quality signaling causes some confusion and uncertainty in both sellers and buyers' decision to maximize profit, making it hard for sellers to predict buyers' behavior. Research implications or Originality - Although the sources and types of quality signaling errors have been investigated in the literature, there has not been satisfactory understanding regarding how inaccuracy of quality certification affects specific market outcomes. We expect that our theoretical model would provide important implications on how to utilize quality signaling to solve adverse selection issues in markets under information asymmetry.

• International journal of advanced smart convergence
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• v.11 no.1
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• pp.19-27
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• 2022

Across the world, 'housing' comprises a significant portion of wealth and assets. For this reason, fluctuations in real estate prices are highly sensitive issues to individual households. In Korea, housing prices have steadily increased over the years, and thus many Koreans view the real estate market as an effective channel for their investments. However, if one purchases a real estate property for the purpose of investing, then there are several risks involved when prices begin to fluctuate. The purpose of this study is to design a real estate price 'return rate' prediction model to help mitigate the risks involved with real estate investments and promote reasonable real estate purchases. Various approaches are explored to develop a model capable of predicting real estate prices based on an understanding of the immovability of the real estate market. This study employs the LSTM method, which is based on artificial intelligence and deep learning, to predict real estate prices and validate the model. LSTM networks are based on recurrent neural networks (RNN) but add cell states (which act as a type of conveyer belt) to the hidden states. LSTM networks are able to obtain cell states and hidden states in a recursive manner. Data on the actual trading prices of apartments in autonomous districts between January 2006 and December 2019 are collected from the Actual Trading Price Disclosure System of the Ministry of Land, Infrastructure and Transport (MOLIT). Additionally, basic data on apartments and commercial buildings are collected from the Public Data Portal and Seoul Metropolitan Government's data portal. The collected actual trading price data are scaled to monthly average trading amounts, and each data entry is pre-processed according to address to produce 168 data entries. An LSTM model for return rate prediction is prepared based on a time series dataset where the training period is set as April 2015~August 2017 (29 months), the validation period is set as September 2017~September 2018 (13 months), and the test period is set as December 2018~December 2019 (13 months). The results of the return rate prediction study are as follows. First, the model achieved a prediction similarity level of almost 76%. After collecting time series data and preparing the final prediction model, it was confirmed that 76% of models could be achieved. All in all, the results demonstrate the reliability of the LSTM-based model for return rate prediction.

• Journal of the Korea Academia-Industrial cooperation Society
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• v.18 no.11
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• pp.637-643
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• 2017

This study analyzed the Quality of Accounting Earning of Investor Relations(IR). For this, we utilized Book-Tax Difference Variability as the proxy of the level of the Quality of Accounting Earning. This study used 2,106 sample data from 2011 to 2016 on the listed firm on KOSPI(Korea Composite Stock Price Index). In short, the study results are as follows. Investor Relation(IR) has a negative relevance with Book-Tax Difference Variability, which agreed with the result of additional analysis using extra sample. According to these results, we can expect that Investor Relations(IR) firms will report more faithful Accounting Earning. This study makes the following fresh contribution to the field. The study result confirms how Investor Relation(IR) affects the Quality of Accounting Earning. We hope that this study will help the development of capital market.

• Journal of the Korea Academia-Industrial cooperation Society
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• v.21 no.1
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• pp.417-425
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• 2020

In this paper, value relevance of the level of dependence on separate accounts in non-life-insurance companies is studied. As noted by Shim et al. (2015), the separate accounts of insurance companies consist of contracts with different attributes from the general accounts, so it is likely that firm value will vary depending on the insurer's dependence on the separate accounts. Thus, in this paper, an empirical analysis has been conducted using quarterly financial data and stock price data from domestic listed non-life-insurance companies from 2011 to 2018. The analysis shows that variables representing the level of dependence on separate accounts have a significant negative relevance to firm value. These results may suggest that changes in the proportion of a non-life-insurer's separate accounts may result in a change to its firm value under the same net assets and net income scales in aggregate accounts. This study provides management implications for the operation of separate accounts from the perspective of maximizing firm value. In addition, this study suggests that disclosure system improvement would be necessary to more directly report the operational performance of the separate accounts.

• The Korean Journal of Franchise Management
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• v.14 no.4
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• pp.35-50
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• 2023

Purpose: This study aims to uncover the mechanism of how initial fees are determined in the restaurant franchise business. Since the initial fees can be considered as a price of utilizing business models and operational knowledge of a certain franchise brand, it is critical to understand the fee decision-making process based on the strategic pricing theories. Therefore, this study investigates the influence of operational value on the determination of initial franchise fees grounded on a value-based pricing strategy. The Operational value is specifically categorized into profitability, growth, and stability of the franchise system. Research design, data, and methodology: The data used were collected through franchise disclosure documents and brand equity index provided by Korea Management Association Consulting. Data from 44 franchise restaurants during 2018 to 2021 are included in the sample. The panel dataset was analyzed by using generalized least squares estimation with R-Studio. Results: Profitability and stability positively influence initial franchise fees. However, growth did not influence initial franchise fees. Conclusions: The results of the study demonstrate that the operational value plays a critical role in determining the franchise fees. Specifically, franchisees recognize how much revenue a franchise system generates for them (i.e., profitability) and how stable the entire system is for operating business (i.e., stability) when they make purchasing decisions for franchise. The findings extend the pricing literature by applying pricing theories in the franchise fee context. Also, the study contributes to franchising and restaurant management literature by providing knowledge of how franchise fees are determined.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.4 no.4
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• pp.45-70
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• 2009

This article investigates which types of the strategies announced by the listed firms contribute to enhancing the long-term performance of the companies. Since 2002, Korean Exchange adopted the "faire disclosure policy" which mandates that all publicly traded companies must disclose material information to all investors at the same time. Thanks to the policy, Korean investors can, now, easily access the board's decision on management strategies on the same day the decision is made. If the companies trustfully carry out their announced strategies, we can decide which types of strategies actually enhance or deteriorate the long-term performance, simply by comparing the announced strategies and the firm's performance. The sample companies are confined to 60 firms that became listed in the KOSDAQ market through back-door listing from 2003 to 2005. Using only the newly listed companies, we can avoid the interference on the long-term performance of the strategies pursued before the event date. This often holds true, for many companies radically modify their strategies after the listing. Furthermore, the back-door listing companies serve our purpose better than IPO companies do, because the former tend to have a variety of announcement within a given period of time beginning the listing date. Using these sample companies, this article analyzes the effect on one year buy-and-hold returns and abnormal buy-and-hold returns after the listing of the various types of strategies announced during the same period of time. The results show that those evidences of restructuring such as 'reduction of capital' and 'resignation of incumbent board members', actually contribute to the increase in adjusted long-term stock returns. Those strategies which can be view as evidence of new investment such as 'increase in tangible assets', 'acquisition of other companies', do also helps the stockholders better off. On the contrary, 'increase in bank loans', 'changes of CEO' and 'merger' deteriorate the equity value. The last findings let us to presume that the back-door listing companies appear to use the bank loans for value-reducing activities; the change in CEO is not a sign of restructuring, but rather a sign of failure of the restructuring; another merger carried out after back-door listing itself is also value-reducing activity. This article's findings on reduction of capital, merger and bank loans oppose the results of the former empirical studies which analyze only the short-term effect on stock price. Therefore, more long-term performance studies on public disclosures are in order.