• The Korean Journal of Financial Management
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• v.25 no.2
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• pp.33-68
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• 2008

The purpose of this paper is to test the market timing hypothesis and impact of macro economic variables on capital structure choice as well as the traditional static trade-off and pecking order theories of capital structure in a integrated framework. Through a two stage test of target capital structure and capital structure choice, none of theories was consistently supported, but most of them were partly supported. In the first stage analysis of target ratio, coefficients of firm-specific variables generally supported the predictions of pecking order theory rather than those of the static trade-off theory. However, the result of the second stage test on capital structure choice supported the hypothesis of the static trade-off theory, which claims that firms usually set and pursue the target leverage ratio. Further, the result of the seconde stage shows that a simple pecking oder theory does not hold because firms with deficit of internal fund tend to issue bonds rather than stocks to raise outside fund. Also, the result indicates that the market timing hypothesis holds because firms with over-valued stocks tend to issue stocks rather than bonds. However, contrary to Korajczyk and Levy(2003), the impact of macro economic variables such as term or credit spreads on capital structure choice was negligible, and the impact of macro economic and market timing hypothesis variables were not greater in financially unconstrained firms as Korajczyk and Levy(2003) suggested.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.19 no.1
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• pp.1-21
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• 2024

Recently, venture capital investment has been shrinking globally due to high interest rates and economic slowdown. Korea is no exception. Due to the downturn in the M&A and public markets, increasing economic uncertainty, and the aftermath of corporate bankruptcies, venture capitalists are facing many difficulties in raising funds. In the changed economic environment, the investment decision factors of venture capitalists have also changed. However, studies on VCs' investment decisions have focused on the general economic environment. This study examines how VCs' investment decision-making factors change during economic recessions and booms. To this end, we interviewed active investors who have experienced both economic recessions and booms to compare how VCs' investment decision factors change: 1) personal characteristics of founders, 2) experience of founders, 3) product/service, 4) market, 5) financial situation, 6) contract terms and 7) venture capital co-investment. The results showed that founder's personal characteristics, experience, and product/service were more important during the economic recession. Market is slightly more important during economic booms. The importance of financial situation and investment conditions increased sharply during the recession compared to the boom. Finally, venture capital co-investment did not differ significantly between recessions and booms. By understanding the investment decision-making factors of venture capitalists in the recent difficult venture investment environment, this study aims to help startups raise funds and survive in a difficult market.

• The Korean Journal of Financial Management
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• v.21 no.1
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• pp.33-58
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• 2004

This paper tests Van Home's hypothesis, a negative correlation between degrees of operating leverage(DOL) and financial leverage(DFL). For an empirical analysis, we extract information from financial statements of manufacturing companies listed in the Korea Stock Exchange. Data extend from 1980 to 2001. The DOL continued to increase until 1997, but decreased dramatically after the IMF financial crisis. However, the DOL has been at a higher level than companies of other countries such as USA and Japan. The DFL has been maintained at a much higher level, as expected. The empirical results indicate a positive correlation between the DOL and the DFL, which is inconsistent with the VanHorne's hypothesis. To further investigate, we divide the whole sample into subgroups according to such management elements as asset size, level of leverages, earnings and cash flow. The results for sub-samples are different from those of whole sample. This indicates we need to incorporate specific managerial factors in order to correctly explain financial decision processes.

• Journal of Navigation and Port Research
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• v.45 no.6
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• pp.276-283
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• 2021

The capital structure of the shipping business, which is characterized by its capital intensity and extreme market volatility, is closely related to long-term stability. Research in this area has been conducted mostly in the form of deriving the determinants of capital structure from company-wise financial ratios. This research, on the other hand, has a different approach to the topic. It identifies the relationship between actual cash profit and loss and other variables - i.e. actual vessel prices, interest rates and leverage ratio - by employing historical simulation. The result demonstrates that the P anamax cash profit shows 0 (break-even point) when the debt weight reaches 64.38% (debt ratio 180.74%) and the Cape, 73.04% (debt ratio 270.92%). Additionally, the ships of different types show a divided pattern for the pre- and post-'Super Boom'. It indicates that the business area and the market cycle should be considered when a leverage strategy is established. This research benefits shipping companies set a rational leverage strategy as well as delivers a reasonable guideline to government authorities for the development of a sound policy on shipping finance.

• Journal of the Korea Academia-Industrial cooperation Society
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• v.14 no.3
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• pp.1109-1115
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• 2013

The present study attempts to build a decision making model for social enterprise investment. The proposed model includes four factors; social compatibility, growth, profitability, stability, and organizational suitability. Thirteen social enterprise investors were requested to rate the importance of each of the four factors when they make investment decisions. Financial stability (25.8%) and social compatibility(25.7%) turned out to be most important followed by profitability(17.5%) and growth(17.1%). Organizational suitability(13.9%) was least important. This study uncovered the first empirical factors for social enterprise investment decision making in the early stage of exploratory research. In practice, also provided several implications to social entrepreneurs, investors and policy makers.

• International Area Studies Review
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• v.16 no.3
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• pp.135-155
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• 2012

The objective of this study was to empirically analyze how Chinese urban residents use mortgage loan in their purchase of houses. For the research purpose, 205 households were surveyed on use of housing finance in Beijing, using prepared questionnaires in advance. The survey result showed that 39.5% of the respondents used mortgage loan in their housing purchase in Beijing. Most of the mortgage loan users got their loans from four state-owned commercial banks. This implies that the government could effectively govern the housing market by managing qualifications and interest rates under the government control. The households who did not use mortgage loan raised the fund mostly from own capital and their parents' money. In general, it was found that the Chinese, besides mortgage loan from commercial banks, rarely depend on outside sources. The dichotomous logistic analysis by logit model showed that socio-economic variables such as age, income, housing price and entry into the housing provident fund had significantly positive effects on the use of mortgage loan in the purchase of housing.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.20 no.41
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• pp.123-134
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• 1997

In this paper we consider the CSP requirements determination problem of new equipment system. The CSP we deal with in the paper are restricted to the demand-based spare parts. For the newly procured equipment systems, mathematical analyses are made for the system which is constructed with the repairable items to derive the associated CSP requirement determination model in mathematical expression, respectively. Based on these analyses, a mathematical model is derived for making an optimal CSP requirement determination subject to the constraint of satisfying any given funds limitation. We assume that the failure of a part follows a Poisson process. Firstly, the operational availability concept in CSP is defined and the relation between the general system availability and the operational availability is established. Secondly, the problem is formulated as the operational availability maximization problem that should satisfy the funds limitation, and then, using the generalized Lagrange multipliers method, the optimal solution procedure is derived.

• Journal of Applied Reliability
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• v.12 no.3
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• pp.225-238
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• 2012

In this paper determined is the quantity of repairable concurrent spare parts(CSP) of a new equipment system to maximize the operational availability under budget constraint and cannibalization allowed. When a part fails, the part is replaced and the failed part is repaired for later use while cannibalization is allowed. The failure of a part is assumed to follow a Poisson process and the availability in CSP is defined. The solution procedure consists of two parts. Firstly, a mathematical model is developed under the assumption that the failure rate is constant during the CSP period and cannibalization is not allowed. Secondly, proposed is a simulation search procedure which improves the heuristic solution to the near optimal solution in a reasonable amount of time under the assumption that the cannibalization is allowed.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.24 no.69
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• pp.1-12
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• 2001

In this paper, the consumable concurred spare parts requirement determination problem of newly procured equipment systems is considered. The problem is formulated as the operational availability maximization problem with any given fund limitation. the that the failure of a part follows a Poisson process and part failure rate is constant in spite of the decrease of number of equipments during operational period, an analytical method is developed to obtain spare part requirements using the generalized Lagrange multipliers method, The numerical examples show that analytic solution is mostly equal to the realistic solution obtained from simulation regardless of assumptions about part failure rate. It is expected that the analytical method developed in the paper can be effectively used to make a budget for provisioning the concurrent spare parts of newly procured equipment system.

• The Korean Journal of Financial Management
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• v.24 no.1
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• pp.109-147
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• 2007

According to the perspective of capital structure theory, we analyzed the dynamism of the capital structure determinants by using panel data of 244 KOSDAQ firms based on two-step GMM system methodology suggested by Blundell Bond(1998). This dynamic methodology had not been used to analyse capital structure determinants in Korea. In the dynamic model of capital structure, profit had negative effect on the book leverage and market leverage, which meant supporting pecking order theory. Growth opportunity (MBR) affected negatively to the market leverage. For the determinants of leverage, earnings volatility had significantly positive effect on KOSDAQ 50 firms. KOSDAQ and KOSDAQ 50 firms had the target leverage. The adjustment speed in KOSDAQ firms was 0.4958 on the book leverage, it was faster than in KOSDAQ 50 firm's 0.2863 on the book leverage and the adjustment speeds for the market leverage were 0.7651 for KOSDAQ firms and 0.5643 for KOSDAQ 50 firms. There was difference in adjustment cost between KOSDAQ firms and KOSDAQ 50 firms.