Korean Market Research Articles

Whose option ratios contain information about future stock prices?

Using the next-day and next-week returns of stocks in the Korean market, we examine the association of option volume ratios – i.e. the option-to-stock (O/S) ratio, which is the total volume of put options and call options scaled by total underlying equity volume, and the put-call (P/C) ratio, which is the put volume scaled by total put and call volume – with future returns. We find that O/S ratios are positively related to future returns, but P/C ratios have no significant association with returns. We calculate individual, institutional, and foreign investors’ option ratios to determine which ratios are significantly related to future returns and find that, for all investors, higher O/S ratios predict higher future returns. The predictability of P/C depends on the investors: institutional and individual investors’ P/C ratios are not related to returns, but foreign P/C predicts negative next-day returns. For net-buying O/S ratios, institutional net-buying put-to-stock ratios consistently predict negative future returns. Institutions’ buying and selling put ratios also predict returns. In short, institutional put-to-share ratios predict future returns when we use various option ratios, but individual option ratios do not.

Corporate governance report compliance rate and accounting conservatism: New evidence from Korea

This study investigates the relationship between the corporate governance report (CGR) compliance rate and a company’s accounting conservatism, utilizing the CGR compliance rate as a novel method to evaluate the effectiveness of corporate governance practices. Given the challenges of applying global indices to measure corporate governance in the Korean market, this study focuses on the CGR compliance rate as a key indicator. Utilizing the ordinary least squares (OLS) regression model, specifically the Ball and Shivakumar (2005) model widely employed in previous studies to assess accounting conservatism, this paper conducts empirical analyses based on 784 observations from Korean listed firms between 2018 and 2021. The main analysis reveals a positive association between the CGR compliance rates (coef = –2.416, p-value < 0.01) and accounting conservatism. A fixed-effect model and a propensity score matching (PSM) model also show a positive association between the CGR compliance rates, respectively (coef = –2.507, p-value < 0.01; coef = –3.118, p-value < 0.1) and accounting conservatism. This study proves that firms with high CGR compliance rates tend to promptly recognize financial losses in financial reporting, thereby safeguarding investors. This suggests that investors should consider the CGR compliance rates when evaluating potential investments. Overall, these findings contribute to validating the CGR compliance rates as a valuable proxy for assessing corporate governance practices in Korean firms.

Reliable biological indicator identification and evaluation of tobacco-derived nicotine using an ultra-sensitive gas chromatography-tandem mass spectrometric method.

Several countries have exempted synthetic nicotine from existing regulatory frameworks, resulting in the widespread substitution of synthetic nicotine (SN) in almost all e-cigarette products available. However, it remains uncertain whether the purported synthetic nicotine is indeed genuine SN. There is a need to develop biological indicators and an analytical method that more clearly distinguishes between the two sources. Impurities in neat tobacco-derived nicotine (TDN) were characterized and identified through non-targeted and targeted analysis. Gas chromatography-tandem mass spectrometry (GC-MS/MS) conditions were optimized for detecting biological indicators in e-cigarette products. Nine tobacco-related alkaloids were identified and selected as biological indicators for TDN. A liquid-liquid extraction and GC-MS/MS quantitative method were developed to detect nine biological indicators in e-cigarette products with the limit of quantification ranging from 0.2 to 4.2µg L-1 using 0.5mL of e-liquid. This method was applied to 50 e-cigarette brands purchased in the Korean market. The developed method was able to easily and accurately identify the origin of nicotine even using a small amount of e-liquid sample. It is expected that effective e-cigarette regulation will be possible if the nicotine biological indicator and high-sensitivity analysis method developed in this study are used.

The Moderating Role of Corporate Governance in the Relationship between Leverage and Firm Value: Evidence from the Korean Market

This study examines the moderating function of corporate governance (CG) to the relationship between leverage and firm value (FV) using Korean market data. The study employs ordinary least-squares panel data regressions and two methods to manage endogeneity problems. The findings show a meaningful negative relationship between leverage and FV. This relationship, however, disappears, when the interaction variable of leverage × CG is included in the econometric model. These results indicate that an effective CG mechanism may lessen the probability of either the entrenched management-decision-making behavior or the agency costs of debt and, therefore, the negative effect of debt to FV diminishes. Moreover, our data show that the relationship between leverage and FV becomes positive, even though insignificant, for firms with a high level of CG, whereas it stays significantly negative for firms with a low level of CG. We also find that leverage for firms with a high level of CG is lower than those firms with a low level of CG. These additional findings support our conclusion of the moderating role of CG, which also influences the firms’ risk, leverage, and FV. The authors recommend the implementation of a robust CG plan to decrease the information asymmetry and the agency leverage problem.

Machine learning approach for carbon disclosure in the Korean market: The role of environmental performance.

Over the past few decades, scholars have employed a wide range of methodologies to determine the factors influencing firms' voluntary carbon disclosure. Most of these studies have been conducted in advanced markets. This article aims to examine the trend of voluntary carbon disclosure in the Korean financial market by utilizing machine learning models such as Random Forest and Gradient Boosted Decision Tree. Based on a set of hand-collected carbon disclosure data, we initially demonstrated significantly better performance of machine learning models compared to the traditional logistic model. Regarding the factors influencing disclosure, we consistently find the importance of environmental scores, emphasizing the role of the emerging mega-trend of ESG management practices in disclosure decisions. However, in contrast to recent studies, we do not find that the unique Korean governance structure, chaebol, has any significantly different implications in terms of prediction performance and variable importance in carbon disclosure decisions.

Heterogeneous macroeconomic factors' effects on stocks across sizes, styles, and sectors in the South Korean market.

Knowledge of the key macroeconomic variables that influence stock volatility across capital sizes, styles, and sectors can provide clues for investment strategies and policy decisions. We use the GARCH-MIDAS model with feature selection to analyze Korean Benchmark Indices from 2009 to 2022. This study maximizes memory retention through an optimal fractional differentiated price series and uses an adaptive lasso penalty for feature selection. The housing price-sales index and realized volatility were consistently influential across most indices and sectors. The GARCH-MIDAS model, paired with these variables, significantly improves long-term stock volatility forecasts. This study underscores the need to monitor housing prices in South Korea because of their substantial effects on long-term stock volatility.

Strategic Suggestions for Video Content Firms: Focusing on YouTube and Netflix of the South Korean Market

Strategic Suggestions for Video Content Firms: Focusing on YouTube and Netflix of the South Korean Market

Integrating Multimodal and Generative AI in Design Research: Enhancing Ethnographic Methods with Data-Driven Analysis

This research examines the application of Multimodal and Generative AI in analyzing interior design trends within the South Korean market. The objective is to enhance traditional ethnographic research methods with AI's quantitative capabilities, offering a more comprehensive understanding of design preferences. This methodology uses AI tools to systematically analyze and categorize design elements from a large dataset of interior design images sourced from a relevant online platform. This process involves extracting key visual trends and patterns using AI-driven semantic analysis and clustering techniques. The study identifies and classifies four dominant design trends, providing a structured overview of current market preferences. By integrating AI into design trend analysis, the study demonstrates a novel approach to understanding consumer preferences, potentially influencing future design decisions. This use of AI in design research broadens the scope of traditional ethnographic studies in design and provides practical insights for designers and industry practitioners, suggesting a shift towards more data-driven design practice.

Management of the Pension Fund in Korea: Sharpe Ratio as a Measurement

Purpose: This study criticizes the existing benchmarks of the national equity fund specified by the National Pension Service and proposes alternative benchmarks.
 Design/methodology/approach: First, this study investigates whether the existing benchmarks returns are affected by the value and momentum factors. Second, we examine the effects of different factors on the benchmark returns of internal and outsourcing investments. Third, we propose three benchmarks by including the value factor and/or momentum factor. Finally, the Sharpe ratios of return-to-risk are used to measure these proposed benchmarks compared to the existing benchmarks.
 Findings: First, the existing benchmarks of internal and outsourcing investments are associated with value and momentum factors, which have been observed in many other countries. Second, the Sharpe ratios of the three proposed benchmarks - value oriented, momentum oriented, and value & momentum oriented - are always better than the existing benchmarks. Third, the Sharpe ratio of the value oriented benchmark is better than that of the momentum oriented and value & momentum oriented benchmarks. Finally, the Sharpe ratios are better with increased investment weights of value and/or momentum.
 Research limitations/implications: This study uses the Sharpe ratio to measure the return-to-risk relationship. There could be other measures to capture the relationship.
 Originality/value: This is the first research to analyze the national pension equity fund with proposed benchmarks in the Korean market.

Developing A Star-Up Business From A Management And Financial Perspective For Indonesian Workers In Korea

Many Indonesian citizens seek opportunities abroad, including becoming Indonesian workers in various countries, notably in South Korea. This phenomenon is further fueled by the global popularity of the Korean wave, attracting both Indonesian workers and students to Korea. With a significant proportion of Indonesia's population falling within the productive age range (15-64 years), there is a growing demand for diverse job opportunities. The recent boom in startup businesses, driven by technological advancements and government support, has provided a promising avenue for addressing these economic challenges. South Korea, known for its rapid technological development, offers an ideal environment for Indonesian workers in Korea to venture into startups. However, navigating the complexities of the Korean startup landscape, including fierce competition and intricate regulations, presents its own set of challenges. Building a robust network, understanding local regulations, and focusing on effective management and financial planning are essential for success. This community service initiative, conducted by IBI Kosgoro 1957 and the Indonesian Ambassador in Korea in collaboration with Kaya University and Busan University, aims to enhance the knowledge of Indonesian workers in Korea in the areas of startup business development, management, and finance. Through interactive seminars, discussions, and ongoing evaluations, this initiative seeks to empower Indonesian workers with the skills and insights needed to thrive in the competitive Korean market. The results and discussions from this initiative emphasize the importance of effective marketing strategies tailored to the Korean market, the significance of financial management in startup success, and the potential for Indonesian workers in Korea to build successful businesses by leveraging their unique experiences and networks. In conclusion, developing startup businesses in South Korea as Indonesian workers entails thorough market research, strong business planning, capable management teams, sound financial management, tailored marketing strategies, and adaptability. By effectively implementing these factors, Indonesian workers in Korea can enhance their prospects of establishing and growing successful startups in a competitive environment.

Policies and Energy Efficiency of Heat Recovery Ventilators in South Korea

To reduce national greenhouse gas emissions, the South Korean government has encouraged new energy businesses and implemented policies to reduce energy consumption in buildings, and aims to construct all new buildings as zero-energy buildings by 2025. According to the promotion of policies on passive houses and zero-energy buildings, the thermal insulation and airtight performance of new buildings have been further enhanced. However, to enhance indoor comfort and air quality in new airtight buildings, it is critical to secure an adequate amount of ventilation. Heat recovery ventilators (HRVs) in South Korea have been used for more than 20 years as high-efficiency energy equipment; however, the high-efficiency standard 20 years ago (cooling efficiency 45%, heating efficiency 70%) is still being employed without any change. Most HRVs in the Korean market either meet or exceed this standard. This study examined HRV performance changes from 2010 to 2020 based on the data of 847 HRV performance certifications given by a certification agency. It also analyzed how institutional strategies and related laws contributed to the enhancement of such performance. As HRVs in South Korea are only required to satisfy the pre-defined efficiency criteria, the development and use of HRVs focus more on cost reduction rather than efficiency enhancement. Under such market conditions, it is challenging to research and design highly efficient HRVs along with customer satisfaction. If better market conditions are offered that would welcome HRVs with higher efficiency, the development of better HRVs, as compared to those analyzed in this research study, would be possible.

Changes in the Relation Between ESG and Expected Returns According to ESG Awareness Levels

The COVID-19 pandemic has triggered an increased awareness and interest in ESG (Environmental, Social, Governance) among investors in the Korean market. Consequently, this study examines the changes in investors’ tastes and preferences regarding ESG before and after COVID-19 and analyzes how these changes affect the relationship between ESG and expected returns. The analysis revealed that, before COVID-19 the excess returns of portfolios constructed by buying stocks with high ESG scores and selling stocks with low ESG scores were not statistically significant. However, after COVID-19 the excess returns of these portfolios were significantly positive. This result suggests that prior to the pandemic, investors did not perceive ESG as a risk and showed no preference for ESG investments, leading to insignificant excess returns close to zero. In contrast, after the COVID-19 pandemic, increased interest in ESG resulted in a shift in investor preferences, leading to positive excess returns in ESG investments. The results remain consistent even after controlling for firm characteristics. Furthermore, when we examine the impact of each ESG component on expected returns separately, we find that heightened interest in environmental and social factors has a significant positive effect on expected returns.

Impact of Increased Uncertainty due to COVID-19 on Analyst Research Reports

This study investigated the implications of Covid-19 induced non-face-to-face remote work environment on analysts’ reports. Employing an empirical analysis of the Korean market from 2016 to 2021, we reveal that research reports during the Covid-19 period exhibit larger prediction errors compared to the pre-Covid era. Despite the reduced accuracy, abnormal trading volumes were observed on the publication dates of reports during this period. Furthermore, these effects are particularly pronounced in reports issued by large brokerage firms with “Buy” recommendations and among foreign investors. Our findings highlight that the pandemic’s non-face-to-face environment has heightened uncertainty in research analysts’ predictions, leading to a decline in reporting accuracy. However, despite these challenges, there is an increase in demand for information from investors, and the impact of the analyst report on the financial market may be greater due to the higher demand for information from investors.

Return predictability of short-selling and financial distress firms: Evidence from Korean stock market

This paper investigates the relationship between short-selling activity and one-month ahead stock returns, with a focus on the role of distressed firms in the Korean stock market. In contrast to the U.S. market, we find that short-selling activity is concentrated on firms in the investment-grade group. Consistent with prior research, we find predictability of short-selling trading in stock returns. Moreover, we find that short-selling activity has significant role in predicting stock returns for investment-grade but not for speculative-grade group in the Korean market.

Identification of Various InDel-II Variants of the White Spot Syndrome Virus Isolated from Frozen Shrimp and Bivalves Obtained in the Korean Commercial Market.

White spot syndrome virus (WSSV) poses a significant threat to the global shrimp industry. We investigated the presence of WSSV in frozen shrimp (n = 86) and shellfish (n = 185) from the Korean market (2010-2018). The detection rate of first-step polymerase chain reaction (PCR) in domestic shrimp was 36.8% (7/19), whereas that in imported shrimp was 0.01% (1/67). Furthermore, the WSSV genome was amplified from domestic bivalve mollusks by first- and second-step PCR with accuracies of 3.4% (5/147) and 15.6% (23/147), respectively. The genetic relatedness of InDel-II regions among WSSVs detected in domestic shrimp groups revealed four variants (777, 5649, 11,070 and 13,046 bp insertion or deletion), and imported shrimp groups had four variants (10,778, 11,086, 11,500 and 13,210 bp) compared with the putative ancestor WSSV strain. The 5649 bp variant was the dominant type among the WSSV variants detected in domestic shrimp (54.5%, 6/11). Notably, bivalve mollusks exhibited six variants (777, 5649, 5783, 5876, 11,070 and 13,046 bp), including four variants detected in shrimp, indicating that bivalve mollusks could facilitate WSSV tracking. In a challenge test, whiteleg shrimp (Litopenaeus vannamei) exhibited varying mortality rates, indicating a link between InDel-II deletion and viral replication. These findings highlight the complexity of WSSV transmission.

The performance distribution and managerial skill of passive funds: evidence from the Korean market

This study investigates the performance distribution of passive funds in the Korean market and compares it with the performance distribution of active funds. The key findings are as follows, first, the performance distribution of passive funds has a thicker tail compared to that of active funds. There are passive funds that achieve outstanding performance, and both the false discovery rate (FDR) analysis and simulation analysis suggest that their outperformance is driven by managerial skill rather than luck. Second, passive fund performance is more persistent compared to active fund performance. Third, investors are less responsive to passive fund performance compared to active fund performance. The fund flow-performance relationship is significantly positive for active funds but not for passive funds. This implies that investors may not recognize the managerial skills of passive funds.

Accurate determination of 11 representative phthalates and di(2-ethylhexyl) terephthalate in polyvinyl chloride using isotope dilution-gas chromatography/mass spectrometry

Phthalates are mainly used as plasticizers in polyvinyl chloride (PVC). However, prolonged exposure to phthalates poses considerable risks to human health. Consequently, the utilization of phthalates in consumer products is subject to regulations, with a defined threshold of 0.1 %. In this study, we developed an accurate and simultaneous method for determination of 11 representative phthalates and a non-phthalate plasticizer (di(2-ethylhexyl) terephthalate, DEHT) in PVC as a higher-order reference method. Homogeneously prepared PVC samples, each containing approximately 0.1 % of the target plasticizer compounds, were analyzed using gas chromatography-mass spectrometry (GC–MS) with deuterium-labeled phthalates and DEHT. The developed method could effectively separate and quantify all target plasticizers without interference with each other and potential overlap between the isomeric forms of phthalates, di-isodecyl phthalate, and di-isononyl phthalate. The developed method has high-order metrological quality, exhibiting exceptional selectivity, accuracy, repeatability (≤ 2.17 %), reproducibility (≤ 2.16 %), and relative expanded uncertainty (≤ 5.6 %). This analytical method is thus suitable for accurately assessing the target plasticizer levels in PVC products for ensuring compliance with the established 0.1 % threshold. This method was successfully applied to quantify twelve distinct plasticizers in PVC products obtained from the Korean market, validating its effectiveness and reliability in real-world scenarios.

Shadow Labor in Care Services: Why Do South Korean Women Care Workers Work Such Long Hours and Get Paid So Little?

Abstract Korea is a country with extremely long working hours and severe gender inequality in the labor market. Based on twenty-nine in-depth interviews with Korean women care workers, this study investigates key mechanisms that reproduce unpaid and unrecognized shadow labor in paid care services. Accordingly, it argues that the presumption that it is mostly Korean men who suffer from working long hours is incorrect. Women workers work long hours, and they often do so without compensation for overtime. They also engage in labor that is not included in their original job description. The Korean labor market supplies an unlimited number of women for cheap labor in the care service sector, meaning the government can depend heavily on private organizations and businesses to meet increasing care needs among the population. Because women care workers could not specify an employer who is responsible for their wages and working conditions, they could not see themselves as employees with basic labor rights. Instead, they take the familiar roles of dutiful daughters and caring mothers, consenting to the very situation that makes them susceptible to severe wage penalties and unrecognized and unappreciated long working hours.

The Influence of BTS on the Expansion of Its Affiliated Company

There are many articles related to the Korean entertainment industry, but there are very few descriptions and analyses of individual groups or artists. Therefore, the research topic of this paper is the influence of BTS on the expansion of its affiliated company. This paper examines the impact of BTS on the company from three perspectives: the impact of BTS on the company's profitability, the company's popularity, and the company's strategic direction. Bighit has gone from being on the brink of bankruptcy to being one of the top four entertainment companies, and it's a credit to BTS. In 2016 BTS released the album The Most Beautiful Moment in Life which made Bighit's first turnaround, and the company's name gradually began to be known to the public and received its first investment, which Bighit also relied on to get out of trouble, and in 2018 BTS released the album Love Yourself, which once again caused a sensation and started its concert tour. BTSs high popularity could lead to good popularity for new groups to be launched in the future; the success of BTS in the US and Korea also led HYBE (Original Bighit Entertainment) to focus on these markets and to launch groups such as TXT for the Korean market. Therefore, it is found that BTS has a significant impact on the expansion of the company in terms of company size, market share, company popularity, acquisition, and strategic markets.

US Originated Asymmetric Volatility Spillover Effects: An Intraday Comparison Between Korean and Japanese Stock Markets

US Originated Asymmetric Volatility Spillover Effects: An Intraday Comparison Between Korean and Japanese Stock Markets