Firms In Korea Research Articles

The Effect of U.S. Trade Remedies on Korea Firms

We analyze the cases of the U.S.’s antidumping and countervailing measures initiated from 1992 to 2008, using a panel analysis to test how U.S. imports from South Korea are affected. It was found that the effect of U.S. authorities initiating antidumping or countervailing duty investigation is that the 1.0% imposition of dumping or countervailing duty caused an increase in the unit price of imports of Korean products, resulting in an average 1.81% imports fall by 1.85%. When we examine the effect of reducing the amount of imports by industry, the decline of textiles and other products is relatively large in comparison to the effect on other industries as they are typically small and medium enterprises. We argue that the decline in relative price competitiveness of domestic exports relative to other countries’ products and the decline in market share have had a negative impact on production utilization rate and sales growth due to the decline in export shipments of domestic production firms.

The Marginal Value of Heat in the Korean Manufacturing Industry

Thirty industrial heat (IH) providers in Korea have better energy efficiency and emit lower air pollutants than individual companies that produce and consume heat for their industrial production. Because these providers collect waste heat from garbage incineration plants, power plants, or industrial processes of steel and chemical companies, as well as heat generated through combined heat and power plants and boilers. IH is an important input, used in industrial production as a form of hot water or steam. This note tries to assess the marginal value (MV) of IH in the manufacturing industry, using the specific case of Korea. To this end, a trans-log production function is estimated using the data gathered from a survey of 256 manufacturing firms in Korea. The MV of IH is estimated to be KRW 203,696 (USD 175.40) per tonne. This estimate is statistically significant at the 1% level. The average price of IH, defined as total expenditure on IH purchased in 2016 divided by total amount of IH purchased in 2016, is KRW 39,455 (USD 34.00) per tonne. Therefore, the MV of IH is about five times as large as the average price of IH.

The Effective Factors of Professional Learning : Study on Accounting Firms in Korea

The purpose of this study is to substantiate the affecting factors of informal learning outcomes for professions in various dimensions of an individual and organization. In specific, the study analyzed the effects of learning motivation, job characteristics, and a supportive learning environment which have on task-related knowledge acquisition, adapting to organization and understanding contexts, relationship formation, and improving self-development-ability. The participants of the study were 261 professionals working at four major accounting firms in South Korea. Multiple regression models were applied step by step for analysis. In this study, the informal learning of professionals working at four major accounting firms is influenced by various factors of learning motivation, job characteristics, and a supportive learning environment. The detailed analysis results were as follows. Firstly, peer-support showed the most positive effect on task-related knowledge acquisition. Secondly, for adapting to organization and understanding contexts, task autonomy showed the greatest effect. Thirdly, peer-support was found to be the most important factor for relationship formation. Fourthly, for improving self-development ability, learning goal orientation showed to be the most important factor. The various factors facilitated the professional learning by empirical identification. The study presented practical implications for creating an effective informal learning support environment.

Business Groups and Corporate Social Responsibility

There is a growing literature on corporate social responsibility (CSR), but few have focused on the implications of business groups for CSR. We examine the antecedents and outcomes of CSR behaviors of group firms in Korea. We find that group affiliation is associated with higher CSR overall and for its major societal and environmental components. However, the ownership disparity between cash flow and control by controlling inside shareholders is associated with lower CSR, consistent with opportunistic rent expropriation theory. We further find that CSR initiatives can impact group firms positively in the event of bad events, consistent with insurance theory. This motive for CSR as a means of enhancing reputation capital to buffer the bad events is pronounced for group firms because of group-wide dissemination of negative reputational externality.

Intragroup Transactions, Corporate Governance, and Corporate Philanthropy in Korean Business Groups

This study examines how the corporate philanthropy decisions of group-affiliated firms in Korea (Chaebol firms) are made. Based on the attention-based view, we argue that when corporate decision makers at group-affiliated firms focus their attention more (less) on internal markets than external stakeholders because of the firm’s high (low) reliance on intragroup transactions, the firm will decrease (increase) its level of corporate philanthropy. We further argue that the relationship will be stronger when governance mechanisms focus on the instrumental value of corporate philanthropy. Using a panel sample of group-affiliated firms in Korea from 2011 to 2015, we find that as intragroup sales increase, the level of corporate philanthropy decreases, and such a negative relationship is stronger when outside director representation and foreign investor ownership are high. Our study suggests that internal dependence and corporate governance mechanisms jointly affect the level of corporate philanthropy at firms in a business group. Thus, this study contributes to the literature on corporate philanthropy, business group, and corporate governance.

Monitoring Role of Venture Capital in the Initial Public Offerings: Evidence from Korea

ABSTRACTBecause the government has initiated the development of venture capital firms in Korea, independent venture capital firms have been significantly influenced by government regulations and interventions; in contrast, corporations have made venture investments internally to avoid the regulations. This study investigates whether the Korean institutional environment harms the monitoring role of independent venture capital firms, while it does not significantly impact corporate venture capital firms. In an IPO setting, we find that earnings management (long-term performance) significantly decreases (increases) with the ownership of corporate venture capital firms. However, we do not find a significant relation between the ownership of independent venture capital firms and earnings management or long-term performance. The results suggest that Korean independent venture capital firms do not play a role in monitoring their investee companies; in contrast, corporate venture capital firms play a monitoring role.

Employment effect of innovation under different market structures: Findings from Korean manufacturing firms

This research provides empirical evidence on the employment effect of both process and product innovations under different market structures, using data from 1999 to 2009 on 11,369 manufacturing firms in Korea. Consistent to the literature, it first finds that the overall employment effect of innovations is positive, since process innovations do not have any significant effect but product innovations have positive and significant effects on employment. Then, our contribution is to estimate the employment effect of innovations in different market structure by adding interaction terms between proxies for market structure and each type of innovation. We find that process innovation has a greater negative effect in more monopolistic markets, and confirm no significant differences in the employment effect of product innovations across different market structure. Overall, we show that innovations have different effects on employment across different market structures, which implies that a competitive market is important for increasing employment through innovation.

A study on the earnings response coefficient (ERC) of socially responsible firms

PurposeThe purpose of the paper is to examine the corporate social responsibility (CSR) – earnings response coefficient (ERC) relation in the code-law tradition and the early stage of CSR practice to fill the research gap in the literature on CSR–ERC relation.Design/methodology/approachThe authors use an association framework for the study. They use the firms listed on Korea Stock Exchange because Korea is classified as a code-law country and most of firms in Korea are in the early stages of CSR development, and Korean samples are considered credible and stable because of the effective financial reforms initiated by Korean government in the late 1990s. The authors collected data from the two data sources: KisValue and Korea Corporate Governance Service.FindingsThe authors find the following. First, CSR is negatively associated with ERC, which indicates that the ability of earnings to capture CSR implication is lower under the circumstances of the code-law and the early stage of CSR development. Second, political sensitivity (business group effect) is positively (negatively) associated with CSR–ERC relation, which means that the politically noticeable CSR concerns strengthen the CSR–ERC relation, and the inclusion of a firm in a business group weakens the CSR–ERC relation.Research limitations/implicationsThe paper derives theoretical implications on the quality of earnings reflecting CSR activities, provides practical implications to the investors who target international capital markets and is expected to help broaden the understanding of CSR–ERC relations in international capital markets.Practical implicationsThe paper provides practical implications to the investors who target international capital markets. Regarding the interpretation of accounting earnings that contain information on CSR activities, the legal origin and the CSR development stages are considered as key factors. Specifically, in the code-law and the early CSR environment, the potential benefits of CSR activities tend to be evaluated optimistically and reflected aggressively in reported earnings. Thus, if investors are in a similar international investment environment, they may need to recalibrate estimates in their decision model with additional CSR information from non-financial sources (e.g. sustainability reports).Originality/valueThe paper is based on the international institutional theory and the discussion of CSR development stages. The international institutional theory states that the legal origin is one of the factors that can help explain the differential aggressiveness of reported earnings by country. In addition, the discussion of CSR stages argues that the CSR practices can be differentially implemented by CSR stages. The authors try to fill the gap in the existing literature by conducting an empirical study based on data from Korea Stock Exchange.

Mobility of Highly Skilled Retirees from Japan to Korea and Taiwan

Attracting highly skilled workers (HSWs) is a major element for the economic development of many countries, especially developing countries. However, the general international mobility of workers is from developing countries to developed ones. Historical evidence has indicated that Korean and Taiwanese firms scout for highly skilled Japanese workers (either retired or soon‐to‐retire) to accrue knowledge and achieve catch‐up. Therefore, this article investigates how highly skilled Japanese workers have been scouted by firms in Korea and Taiwan. Aimed at producing evidence rather than testing hypotheses, the findings of this article provide practical information for firms in developing countries on attracting HSWs for their growth. In addition, this article provides insights into the international mobility of HSWs from a developed country to developing countries, which has not been examined in the previous literature.

재무적 한계기업에 대한 대형회계법인의 회계감사가 기업신용등급평가에 미치는 영향에 대한 실증적 분석

재무적 한계기업에 대한 대형회계법인의 회계감사가 기업신용등급평가에 미치는 영향에 대한 실증적 분석

The impact of technology capability, human resources, internationalization, market resources, and customer satisfaction on annual sales growth rates of Korean software firms

This study investigates the competitive factors of software firms that participated in the Korea Software Firm Competitiveness Awards, a nationwide project supported by the Ministry of Knowledge Economy that studies the performance of software firms in Korea. The study applies concepts from hierarchical multiple regression analysis to develop a model to assess the relationship between the competitive factors of software firms and firm performance. The developed model was validated through a field survey of 79 software firms in Korea. The survey results show a significant relationship between competitive factors and firm performance, as well as the relative influence of significant variables. The findings provide two important implications: first, from a management perspective, software firms in Korea focus on human resources based on technology development in the domestic market, and second, from a policy perspective, the government supports the establishment of external capabilities (internationalization and partnerships) for software firms. These findings are available to researchers, policy makers, software developers, and other market players, and contribute to the literature on the importance of competitive factors.

The Influence of Dynamic Capabilities on the Competitive Capabilities and Performance of Export Venture Firms in Korea

The Influence of Dynamic Capabilities on the Competitive Capabilities and Performance of Export Venture Firms in Korea

Comparative value relevance of accounting information among Asian countries

PurposeThe purpose of this paper is to compare the value relevance of various accounting information disclosed in financial statements of manufacturing companies listed on the stock markets of Korea, Japan, and China over ten years from 2006 to 2015.Design/methodology/approachThe study uses Ohlson (1995) valuation model for empirical investigation and the financial data extracted from the OSIRIS DB to analyze the enterprise value relevance of accounting information for Korean, Chinese, and Japanese companies and to investigate the differences among them.FindingsThe results of the empirical analysis are as follows. First, the coefficient of accounting earnings is the highest in the samples of all firms in Korea, Japan, and China, followed by the coefficients for operating income, net cash flow, book value, and net operating cash flows. Next, Japan has the largest book value, followed by Korea, but China has a negative value. Japan has the largest coefficient of accounting earnings and net operating cash flow, followed by Korea and China. Japan has the largest coefficient of net cash flow and operating income, followed by China and Korea. The results show that the value relevance of accounting earnings is the largest among independent variables related to firm value, but the net operating cash flow is the smallest. In addition, the authors observe that the coefficient of Japan is the largest of all independent variables when compared by country.Originality/valueThe contribution of this study is that it shows the comparative value relevance of accounting information in most economically developed Asian countries such as Korea, Japan, and China. In addition, it is worth showing the characteristics of the national value decision variable by showing different incremental value relevance levels among the three countries.

How does the Stock Market Reacts to Information Security Investment of Firms in Korea : An Exploratory Study

How does the Stock Market Reacts to Information Security Investment of Firms in Korea : An Exploratory Study

정보원천의 중요도가 혁신성과에 미치는 영향 : 기업규모별 비교를 중심으로

Technological as well as organizational innovation has been regarded as an indispensible factor for firm survival and growth in today’s highly competitive environment. In spite of its substantial role in generating innovative ideas, importance of knowledge and information sources for corporate innovation has not been addressed properly and specifically in the relevant literature. Thus, this study examined the influence of information sources on corporate innovation performance using the 2014 Korea Innovation Survey data which collected questionnaires from 4,075 manufacturing firms of Korea. Information sources were divided into eleven categories and their impact on corporate innovation performance was analyzed by firm size. Especially, innovation performance was classified into four groups of product, process, organizational, and marketing innovation performance according to Oslo manual [22]. Logistic regression analysis of 1,251 usable questionnaires revealed that significant information sources for innovation performance were quite different according to firm size. More specifically, innovation performance of large firms was affected by information from suppliers, private client firms, and academia, while small- and medium-sized firms by information from internal sources, suppliers, consulting firms, conferences, professional journals and books, and external meetings. These detailed analysis results are expected to shed some light on information acquisition and utilization strategies for corporate innovation.

Managerial Overconfidence, Self-Attribution Bias, and Downwardly Sticky Investment: Evidence from Korea

ABSTRACTThe extant literature on behavioral corporate finance has explored the effects of overconfidence on investment–cash flow sensitivity (ICS) to explain overinvestment, yet it has overlooked the asymmetric behavior of investments in relation to changes in cash flow levels. This study examines whether investments behave asymmetrically responding to changes in cash flows and, if so, how managerial overconfidence affects asymmetric ICS. Using a sample of KOSPI and KOSDAQ firms in Korea, we find the incidence of downwardly sticky ICS in unconstrained firms. We then find that overconfident managers encourage ICS to be stickier than their rational peers do in unconstrained firms. Finally, we find that managerial overconfidence intensified by self-attribution bias induces ICS to get even stickier, suggesting more explicit evidence of corporate investment distortions. The results of alternative tests using the asymmetric models of Homburg and Nasev (2008) are qualitatively consistent with prior results. Overall, our findings imply a higher incidence of excessive investment commitments driven by overconfident managers.

How Third-Party CSR Evaluation Matters: Keeping Up with Rivals in CSR Performance Ratings of Korean Firms, 2011–2015

Does corporate social responsibility (CSR) evaluation by third-party entities (i.e., external agencies, including civic organizations) affect the CSR performance of firms? This article explores the question of whether and how third-party CSR ratings change the subsequent CSR behavior and hence performance of rated firms. Combining insights from the research on ratings/rankings and a behavioral theory of firms, we hypothesize that firms with large negative CSR rating gaps—i.e., CSR ratings below the industry average—are more prone to improving their subsequent CSR behavior, and hence performance ratings, than those with small negative gaps, because of the desire to avoid being viewed as CSR laggards relative to their industry rivals. As a result, efforts are directed at enhancing CSR performance. Empirical support for this conjecture is found through random effect regression analyses of publicly listed firms in Korea that were rated by the KEJI (Korean Economic Justice Institute) during 2011–2015 with respect to multiple dimensions of CSR. Further results show that the positive effect of negative CSR rating gaps on subsequent CSR ratings appears only in the firms without well-established reputations, suggesting the possibility that firms with weak reputations have stronger incentives to keep up with other industry incumbents in CSR performance ratings than their counterparts.

The Effect of Managerial Overconfidence on Crash Risk

Purpose - This paper investigates whether managerial overconfidence is associated with firm-specific crash risk. Overconfidence leads managers to overestimate the returns of their investment projects, and misperceive negative net present value projects as value creating. They even use voluntary disclosures to convey their optimistic beliefs about the firms' long-term prospects to the stock market. Thus, the overconfidence bias can lead to managerial bad news hoarding behavior. When bad news accumulates and crosses some tipping point, it will come out all at once, resulting in a stock price crash. Research design, data and methodology - 7,385 firm-years used for the main analysis are from the KIS Value database between 2006 and 2013. This database covers KOSPI-listed and KOSDAQ-listed firms in Korea. The proxy for overconfidence is based on excess investment in assets. A residual from the regression of total asset growth on sales growth run by industry-year is used as an independent variable. If a firm has at least one crash week during a year, it is referred to as a high crash risk firm. The dependant variable is a dummy variable that equals 1 if a firm is a high crash risk firm, and zero otherwise. After explaining the relationship between managerial overconfidence and crash risk, the total sample was divided into two sub-samples; chaebol firms and non-chaebol firms. The relation between how I overconfidence and crash risk varies with business group affiliation was investigated. Results - The results showed that managerial overconfidence is positively related to crash risk. Specifically, the coefficient of OVERC is significantly positive, supporting the prediction. The results are strong and robust in non-chaebol firms. Conclusions - The results show that firms with overconfident managers are likely to experience stock price crashes. This study is related to past literature that examines the impact of managerial overconfidence on the stock market. This study contributes to the literature by examining whether overconfidence can explain a firm's future crashes.

The moderating effect of buyer purchasing strategy on the relationship between supplier transaction-specific investment and supplier firm performance

This study examines whether the type of buyer relational strategy (competitive or cooperative strategy) moderates the relationship between supplier transaction specific investments (TSIs) and buyer commitment, and whether the type of buyer cost reduction strategy (purchase price-based strategy or total cost-based strategy) moderates the relationship between buyer commitment and supplier performance outcomes.Data were collected through a survey of purchasing managers at 248 buying firms in Korea. Results indicate that supplier TSIs positively affect supplier firm performance through buyer trust and commitment. The influence of supplier TSIs on buyer commitment depends on which relational strategy buyers use and the influence of buyer commitment on supplier firm performance depends on which buyer cost reduction strategy is used.

What Makes Firms Innovative? The Role of Social Capital in Corporate Innovation

This paper offers a social capital explanation for the purported relationship between human capital investment and an organization’s innovation capability. We argue that social capital plays a mediating role in the relationship between the level of individual knowledge of employees and organizations’ innovation capabilities. The mediating mechanism is attributed to the role of social capital in knowledge exchange and combination that help enhance knowledge creation. Using survey data of 319 manufacturing firms in Korea, we conducted structural equation modeling (SEM) analysis to verify the mediating role of social capital in firms’ innovation performance. The results demonstrated that relational and cognitive dimensions of social capital are important mediators in realizing organizational innovation performance.