• Title/Summary/Keyword: Binary Logistic Model

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A Study on the Effect of Network Centralities on Recommendation Performance (네트워크 중심성 척도가 추천 성능에 미치는 영향에 대한 연구)

  • Lee, Dongwon
    • Journal of Intelligence and Information Systems
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    • v.27 no.1
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    • pp.23-46
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    • 2021
  • Collaborative filtering, which is often used in personalization recommendations, is recognized as a very useful technique to find similar customers and recommend products to them based on their purchase history. However, the traditional collaborative filtering technique has raised the question of having difficulty calculating the similarity for new customers or products due to the method of calculating similaritiesbased on direct connections and common features among customers. For this reason, a hybrid technique was designed to use content-based filtering techniques together. On the one hand, efforts have been made to solve these problems by applying the structural characteristics of social networks. This applies a method of indirectly calculating similarities through their similar customers placed between them. This means creating a customer's network based on purchasing data and calculating the similarity between the two based on the features of the network that indirectly connects the two customers within this network. Such similarity can be used as a measure to predict whether the target customer accepts recommendations. The centrality metrics of networks can be utilized for the calculation of these similarities. Different centrality metrics have important implications in that they may have different effects on recommended performance. In this study, furthermore, the effect of these centrality metrics on the performance of recommendation may vary depending on recommender algorithms. In addition, recommendation techniques using network analysis can be expected to contribute to increasing recommendation performance even if they apply not only to new customers or products but also to entire customers or products. By considering a customer's purchase of an item as a link generated between the customer and the item on the network, the prediction of user acceptance of recommendation is solved as a prediction of whether a new link will be created between them. As the classification models fit the purpose of solving the binary problem of whether the link is engaged or not, decision tree, k-nearest neighbors (KNN), logistic regression, artificial neural network, and support vector machine (SVM) are selected in the research. The data for performance evaluation used order data collected from an online shopping mall over four years and two months. Among them, the previous three years and eight months constitute social networks composed of and the experiment was conducted by organizing the data collected into the social network. The next four months' records were used to train and evaluate recommender models. Experiments with the centrality metrics applied to each model show that the recommendation acceptance rates of the centrality metrics are different for each algorithm at a meaningful level. In this work, we analyzed only four commonly used centrality metrics: degree centrality, betweenness centrality, closeness centrality, and eigenvector centrality. Eigenvector centrality records the lowest performance in all models except support vector machines. Closeness centrality and betweenness centrality show similar performance across all models. Degree centrality ranking moderate across overall models while betweenness centrality always ranking higher than degree centrality. Finally, closeness centrality is characterized by distinct differences in performance according to the model. It ranks first in logistic regression, artificial neural network, and decision tree withnumerically high performance. However, it only records very low rankings in support vector machine and K-neighborhood with low-performance levels. As the experiment results reveal, in a classification model, network centrality metrics over a subnetwork that connects the two nodes can effectively predict the connectivity between two nodes in a social network. Furthermore, each metric has a different performance depending on the classification model type. This result implies that choosing appropriate metrics for each algorithm can lead to achieving higher recommendation performance. In general, betweenness centrality can guarantee a high level of performance in any model. It would be possible to consider the introduction of proximity centrality to obtain higher performance for certain models.

The Policy Effects on Traditional Retail Markets Supported by the Korean Government (정부의 전통시장 지원 정책 효과에 대한 실증연구)

  • Lee, Kyu-Hyun;Kim, Yong-Jae
    • Journal of Distribution Science
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    • v.13 no.11
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    • pp.101-109
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    • 2015
  • Purpose - A traditional retail market is a place that offers economic opportunity to employees and employers alike it also is a place where the community can meet. The Korean government has invested three trillion won to improve physical and non-physical aspects in traditional retail markets since 2004. However, little research on this has been conducted. We explore this research gap that could lead to theory extension. We analyze consumption behavior with respect to traditional retail markets through an empirical analysis, thus overcoming limits in previous research. We empirically analyze policy effects of traditional retail market projects supported by the Korean government. Research design, data, and methodology - We propose a traditional retail market improvement plan via the relation between cause and effect resulting from the analysis. More specifically, logit analysis was carried out with 1,754 consumers in 16 cities nationwide. In order to analyze consumer consumption behaviors nationwide, the probability was analyzed using a logit model. This research analyzes the link between support and non-support by the Korean government using binary values. The dependent variable is whether Korean government support is implemented; the binomial logistic regression is used as the statistical estimation technique. The object variables are:1 (support) or 0 (nonsupport), and the prediction value is between 1 and 0. As a result of the factor analysis of questions related to attributes of service quality, four factors were extracted: convenience, product, facilities, and service. Results - The results indicate that convenience, product, and facilities have a significant influence on consumer satisfaction in accordance with the government's traditional retail market support. Additionally, the results reveal that convenience, product, facilities, and service all have a significant influence on consumer satisfaction in a traditional retail market's service quality and consumer satisfaction. Finally, the analysis indicates that the highly satisfied traditional retail market customer has a significant influence on revisit intention. Moreover, the results reveal that the highly satisfied traditional retail market customer has a significant influence on recommendation intention. Conclusions - This research focused on consumers nationwide to measure policy effects of traditional retail markets compared to previous research that focused on one traditional retail market or a specific area. We verified the relationship of service quality and customer satisfaction and consumer behavior based on service quality theory. The results indicate that consumer satisfaction of traditional retail markets supported by service quality factors has a significant impact. In a concrete form, the results indicate that these effects are from facility modernization projects and marketing support projects of the Korean government. The results also imply that these facility and management support effects from the Korean government have been consistent. We realize that the Korean government has to selectively support traditional retail markets in major cities and small and medium-sized cities. To that end, the Korean government needs to select a concentration strategy for the revitalization of traditional retail markets.

The analysis of medical care behaviors influencing New Diagnosis-Related Groups (DRG) based payment - focused on hospitalized patients with medical illness (신포괄수가에 영향을 미치는 의료행태 요인 분석 - 내과 입원환자 중심으로)

  • Lee, Kyunghee;Wi, Seung Bum;Kim, Suk Il;Choi, Byoong Yong
    • Korea Journal of Hospital Management
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    • v.25 no.2
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    • pp.45-56
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    • 2020
  • Purpose: The purpose of this study is to investigate medical care behaviors influencing accuracy of the payment based New diagnosis-related groups (DRG) compared to fee for service (FFS) in hospitalized patients with medical illness. Methodology: In order to estimate the difference in medical costs between New DRG and FFS depending on medical care behaviors, medical records and hospital claims data (n=4,232) were utilized, which were collected from a single public hospital during the first-half of 2018. Data were analyzed by descriptive statistics, t-test, chi-square test, and multivariate binary logistic regression. Findings: The average difference in medical costs between New DRG and FFS were KRW 506,711±13,945 with incentives and KRW -51,506±12,979 without incentives, respectively. Forty-four point two percent (44.2%, n=1,872) of total subjects were shown to have negative compensation in overall medical costs with New DRG compared to the costs with FFS. Medical care behaviors that affected on the negative compensation were the presence of severe bed sores on admission, medical consultations, death, operations, medications and laboratory or imaging tests with unit price over KRW 100,000, hospital-acquired complications or underlying comorbidities, elderly patients (≧65 years), and hospitalized for more than average inpatient days defined by New DRG (p<0.001). The difference in average medical cost between New DRG and FFS for a group with mild illness was KRW -11,900±10,544, whereas it was KRW -196,800±46,364 for a group with severe illness (p<0.0001). Practical Implications: These findings suggest that New DRG payment model without incentives may incompletely cover the variation of medical costs in real clinical practice. Therefore, policy makers need to consider that the current New DRG reimbursement should be focused and refined to improve accuracy of payment on medical care resources utilized in severe and complex medical conditions.

Vitalization of Ecological, Scenic, Participative aspects of Urban Agriculture - Focusing on Population Characteristics and Individual Recognitions - (생태, 경관, 참여 측면의 도시농업 활성화 방안 모색 - 인구집단 특성과 개인의 주관적 인식 분석을 중심으로 -)

  • Chang, Insu;Suh, Tongju;Kim, Hong sok(Brian)
    • Journal of the Korean Regional Science Association
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    • v.34 no.4
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    • pp.35-48
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    • 2018
  • The purpose of this study is to empirically investigate the experiences and subjective opinions of urban agriculture in order to explore ways to vitalize urban agriculture. More specifically, we divides environmental value into three categories of ecology, landscape, and participation, and defines a function of urban agriculture to improve environmental values related to the three categories mentioned above. The main results of the empirical analysis using the survey data are summarized as follows. First, the probability of gathering information about urban agriculture is higher in metropolitan cities than small cities, and the larger the residence size, the higher the probability of actual urban agriculture participation. Second, the positive response rate was high for the three categories of urban agriculture, while the negative response rate was high for the surrounding environment. The implications derived from the analysis are as follows. First, the opposite results of experiences of urban agriculture suggests that local governments should further promote urban agriculture-based investment policies. In addition, these policies need to be preceded by analysis of the characteristics of population groups in the region Also, it is necessary to improve the environment through urban agriculture.

High School Students' Understanding and Use of Recommended Books Lists (고등학생들의 추천도서목록 이용과 인식에 관한 연구)

  • Chung, Jin Soo
    • Journal of the Korean Society for Library and Information Science
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    • v.56 no.3
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    • pp.5-26
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    • 2022
  • The purpose of this study is to analyze high school students' understanding and use of the recommended books lists. The survey distributed to high school students in seven high schools located in Seoul, and 311 students responded. Using SPSS 24, the data was analyzed by frequency, binary logistic model, and one-way ANOVA. Results show the followings. First, the meaningful factors affecting students' use of recommended books lists are gender, grade levels, and the degree to which students think recommended books lists include the books that are suitable and interesting. Particularly, the degree to which students think recommended books lists include the suitable books for them is the strong factor affecting students' use of the recommended books lists. Second, male students are less likely to use recommended books lists than female students. Male students consistently are less likely to use the recommended books lists made by school librarians, subject teachers, and reading experts and/or organizations. Third, teacher-librarians believed that the recommended books lists would help students who do not enjoy reading and have difficulties in reading. However, the study finds that students who enjoy reading and read well are more willing to use the recommended books lists made by school librarians, subjects teachers, and reading experts and/or organizations than those who do not. Fourth, students are most willing to use the recommended books lists for college preparation. The findings suggest the further research topics in designing the recommended books lists suitable for high school students and in scaffolding the high school students' use of book information reflected in recommended books lists.

Corporate Bond Rating Using Various Multiclass Support Vector Machines (다양한 다분류 SVM을 적용한 기업채권평가)

  • Ahn, Hyun-Chul;Kim, Kyoung-Jae
    • Asia pacific journal of information systems
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    • v.19 no.2
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    • pp.157-178
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    • 2009
  • Corporate credit rating is a very important factor in the market for corporate debt. Information concerning corporate operations is often disseminated to market participants through the changes in credit ratings that are published by professional rating agencies, such as Standard and Poor's (S&P) and Moody's Investor Service. Since these agencies generally require a large fee for the service, and the periodically provided ratings sometimes do not reflect the default risk of the company at the time, it may be advantageous for bond-market participants to be able to classify credit ratings before the agencies actually publish them. As a result, it is very important for companies (especially, financial companies) to develop a proper model of credit rating. From a technical perspective, the credit rating constitutes a typical, multiclass, classification problem because rating agencies generally have ten or more categories of ratings. For example, S&P's ratings range from AAA for the highest-quality bonds to D for the lowest-quality bonds. The professional rating agencies emphasize the importance of analysts' subjective judgments in the determination of credit ratings. However, in practice, a mathematical model that uses the financial variables of companies plays an important role in determining credit ratings, since it is convenient to apply and cost efficient. These financial variables include the ratios that represent a company's leverage status, liquidity status, and profitability status. Several statistical and artificial intelligence (AI) techniques have been applied as tools for predicting credit ratings. Among them, artificial neural networks are most prevalent in the area of finance because of their broad applicability to many business problems and their preeminent ability to adapt. However, artificial neural networks also have many defects, including the difficulty in determining the values of the control parameters and the number of processing elements in the layer as well as the risk of over-fitting. Of late, because of their robustness and high accuracy, support vector machines (SVMs) have become popular as a solution for problems with generating accurate prediction. An SVM's solution may be globally optimal because SVMs seek to minimize structural risk. On the other hand, artificial neural network models may tend to find locally optimal solutions because they seek to minimize empirical risk. In addition, no parameters need to be tuned in SVMs, barring the upper bound for non-separable cases in linear SVMs. Since SVMs were originally devised for binary classification, however they are not intrinsically geared for multiclass classifications as in credit ratings. Thus, researchers have tried to extend the original SVM to multiclass classification. Hitherto, a variety of techniques to extend standard SVMs to multiclass SVMs (MSVMs) has been proposed in the literature Only a few types of MSVM are, however, tested using prior studies that apply MSVMs to credit ratings studies. In this study, we examined six different techniques of MSVMs: (1) One-Against-One, (2) One-Against-AIL (3) DAGSVM, (4) ECOC, (5) Method of Weston and Watkins, and (6) Method of Crammer and Singer. In addition, we examined the prediction accuracy of some modified version of conventional MSVM techniques. To find the most appropriate technique of MSVMs for corporate bond rating, we applied all the techniques of MSVMs to a real-world case of credit rating in Korea. The best application is in corporate bond rating, which is the most frequently studied area of credit rating for specific debt issues or other financial obligations. For our study the research data were collected from National Information and Credit Evaluation, Inc., a major bond-rating company in Korea. The data set is comprised of the bond-ratings for the year 2002 and various financial variables for 1,295 companies from the manufacturing industry in Korea. We compared the results of these techniques with one another, and with those of traditional methods for credit ratings, such as multiple discriminant analysis (MDA), multinomial logistic regression (MLOGIT), and artificial neural networks (ANNs). As a result, we found that DAGSVM with an ordered list was the best approach for the prediction of bond rating. In addition, we found that the modified version of ECOC approach can yield higher prediction accuracy for the cases showing clear patterns.

A Study on the Factors Affecting the Entrepreneurial Intentions of Manufacturing Industry Employees: Focused on the Effects of Entrepreneurship and Personal Characteristics (중소 제조업 종사자의 창업의도에 미치는 영향 요인에 관한 연구: 기술개발 지원사업의 조절효과를 중심으로)

  • Shin, Yong-Sik;Kim, Jae-Hong;Lee, Il-han
    • Asia-Pacific Journal of Business Venturing and Entrepreneurship
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    • v.16 no.4
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    • pp.135-151
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    • 2021
  • This research attempts to analyze the factors influencing the entrepreneurial intention of employees in manufacturing field. In particular, key factors of entrepreneurship and personal characteristics explain a significant association with the intention to start-up. And study whether R&D support from public enterprise adjusts intention to entrepreneurial Intention. This study conducted a online survey on 292 small and medium-sized enterprise manufacturing employees in May 2020. Using linear regression model and binary logistic model. The main study results are the following: First, among the key factors(innovativeness, proactiveness, risk-taking) of entrepreneurship, proactiveness hardly influenced the opportunity competency. Second, among the factors(risk-taking propensity, locus of control, tolerance for ambiguity) of personal characteristics, locus of control hardly influenced the opportunity competency. Third, opportunity competency(opportunity recognition and opportunity evaluation) had positive influence to entrepreneurial intention. Fourth, the study investigated the mediated effect of opportunity competency. The result showed that among the factors of entrepreneurship and personal characteristics, only two factors that are proactiveness and locus of control were not mediated by opportunity competency. and opportunity evaluation was acted as a mediator between proactiveness and entrepreneurial Intention, compared with opportunity recognition. Lastly, public enterprise's R&D supporting moderated the entrepreneurial intention). Based on the result, the study showed that first, the key factors of entrepreneurship except for proactiveness and personal characteristics(risk-taking propensity, locus of control, tolerance for ambiguity) except for locus of control affect the intention to start-up, repeatedly. This results are explained that employees have not started a business yet. Second, research on start-up suggests the need to analyze factors differentiated before and after the start-ups. Based on the results, entrepreneurship and personal characteristics show that study on the effects of start-up intentions should be carried out before and after the actual start-up takes place, and can be used as effective data in policies to promoting start-ups in manufacturing field.

Perceived Social Support Among the Elderly People Living Alone and Their Preference for Institutional Care: Analysis of the Mediator Effect in the Perception of the Probability of Lonely Death (독거노인의 지각된 사회적 지지와 시설 돌봄 선호: 고독사 가능성 인식의 매개 효과 분석)

  • Cho, Hye Jin;Lee, Jun Young
    • 한국노년학
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    • v.40 no.4
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    • pp.707-727
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    • 2020
  • This study aims to empirically analyze the role that perception of the probability of lonely death among the elderly people living alone plays in the relationship between perceived social support and preference for institutional care based on Andersen's expanded Behavioral Model (2002). The subjects (n=676) of this study were the elderly people living alone, extracted from the "2018 Seoul Aging Survey." With "perceived social support" as an independent variable, "preference for institutional care" as a dependent variable, and "perception of the probability of lonely death" as a mediator variable, we conducted a Binary Logistic Regression to follow the three steps of analyzing mediation effect, as suggested by Baron and Kenny (1986). The results showed that perceived social support has a negative effect on the preference for institutional care and perception of the probability of lonely death among the elderly people living alone; at the same time, perception of the probability of lonely death was found to have a positive effect on their preference for institutional care. Lastly, perception of the probability of lonely death was found to partially mediate the effect of perceived social support among the elderly people living alone in terms of their preference for institutional care. Based on these findings, the practical implications of this study can be summarized as follows. First, various programs and support should be provided to the elderly people living alone in order to enhance the level of perceived social support, a factor that has been confirmed to increase preference for institutional care among the elderly people living alone. Second, as the perception of the probability of lonely death was confirmed to be a psychosocial factor of the preference for institutional care, we need to promote education and support for older people living alone to prepare them for lonely death. These efforts are expected to form a foundations for implementing a community-based integrated care system, "Aging in Place," which is the policy direction required for older people care.

A Time Series Graph based Convolutional Neural Network Model for Effective Input Variable Pattern Learning : Application to the Prediction of Stock Market (효과적인 입력변수 패턴 학습을 위한 시계열 그래프 기반 합성곱 신경망 모형: 주식시장 예측에의 응용)

  • Lee, Mo-Se;Ahn, Hyunchul
    • Journal of Intelligence and Information Systems
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    • v.24 no.1
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    • pp.167-181
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    • 2018
  • Over the past decade, deep learning has been in spotlight among various machine learning algorithms. In particular, CNN(Convolutional Neural Network), which is known as the effective solution for recognizing and classifying images or voices, has been popularly applied to classification and prediction problems. In this study, we investigate the way to apply CNN in business problem solving. Specifically, this study propose to apply CNN to stock market prediction, one of the most challenging tasks in the machine learning research. As mentioned, CNN has strength in interpreting images. Thus, the model proposed in this study adopts CNN as the binary classifier that predicts stock market direction (upward or downward) by using time series graphs as its inputs. That is, our proposal is to build a machine learning algorithm that mimics an experts called 'technical analysts' who examine the graph of past price movement, and predict future financial price movements. Our proposed model named 'CNN-FG(Convolutional Neural Network using Fluctuation Graph)' consists of five steps. In the first step, it divides the dataset into the intervals of 5 days. And then, it creates time series graphs for the divided dataset in step 2. The size of the image in which the graph is drawn is $40(pixels){\times}40(pixels)$, and the graph of each independent variable was drawn using different colors. In step 3, the model converts the images into the matrices. Each image is converted into the combination of three matrices in order to express the value of the color using R(red), G(green), and B(blue) scale. In the next step, it splits the dataset of the graph images into training and validation datasets. We used 80% of the total dataset as the training dataset, and the remaining 20% as the validation dataset. And then, CNN classifiers are trained using the images of training dataset in the final step. Regarding the parameters of CNN-FG, we adopted two convolution filters ($5{\times}5{\times}6$ and $5{\times}5{\times}9$) in the convolution layer. In the pooling layer, $2{\times}2$ max pooling filter was used. The numbers of the nodes in two hidden layers were set to, respectively, 900 and 32, and the number of the nodes in the output layer was set to 2(one is for the prediction of upward trend, and the other one is for downward trend). Activation functions for the convolution layer and the hidden layer were set to ReLU(Rectified Linear Unit), and one for the output layer set to Softmax function. To validate our model - CNN-FG, we applied it to the prediction of KOSPI200 for 2,026 days in eight years (from 2009 to 2016). To match the proportions of the two groups in the independent variable (i.e. tomorrow's stock market movement), we selected 1,950 samples by applying random sampling. Finally, we built the training dataset using 80% of the total dataset (1,560 samples), and the validation dataset using 20% (390 samples). The dependent variables of the experimental dataset included twelve technical indicators popularly been used in the previous studies. They include Stochastic %K, Stochastic %D, Momentum, ROC(rate of change), LW %R(Larry William's %R), A/D oscillator(accumulation/distribution oscillator), OSCP(price oscillator), CCI(commodity channel index), and so on. To confirm the superiority of CNN-FG, we compared its prediction accuracy with the ones of other classification models. Experimental results showed that CNN-FG outperforms LOGIT(logistic regression), ANN(artificial neural network), and SVM(support vector machine) with the statistical significance. These empirical results imply that converting time series business data into graphs and building CNN-based classification models using these graphs can be effective from the perspective of prediction accuracy. Thus, this paper sheds a light on how to apply deep learning techniques to the domain of business problem solving.

Factors Affecting International Transfer Pricing of Multinational Enterprises in Korea (외국인투자기업의 국제이전가격 결정에 영향을 미치는 환경 및 기업요인)

  • Jun, Tae-Young;Byun, Yong-Hwan
    • Korean small business review
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    • v.31 no.2
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    • pp.85-102
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    • 2009
  • With the continued globalization of world markets, transfer pricing has become one of the dominant sources of controversy in international taxation. Transfer pricing is the process by which a multinational corporation calculates a price for goods and services that are transferred to affiliated entities. Consider a Korean electronic enterprise that buys supplies from its own subsidiary located in China. How much the Korean parent company pays its subsidiary will determine how much profit the Chinese unit reports in local taxes. If the parent company pays above normal market prices, it may appear to have a poor profit, even if the group as a whole shows a respectable profit margin. In this way, transfer prices impact the taxable income reported in each country in which the multinational enterprise operates. It's importance lies in that around 60% of international trade involves transactions between two related parts of multinationals, according to the OECD. Multinational enterprises (hereafter MEs) exert much effort into utilizing organizational advantages to make global investments. MEs wish to minimize their tax burden. So MEs spend a fortune on economists and accountants to justify transfer prices that suit their tax needs. On the contrary, local governments are not prepared to cope with MEs' powerful financial instruments. Tax authorities in each country wish to ensure that the tax base of any ME is divided fairly. Thus, both tax authorities and MEs have a vested interest in the way in which a transfer price is determined, and this is why MEs' international transfer prices are at the center of disputes concerned with taxation. Transfer pricing issues and practices are sometimes difficult to control for regulators because the tax administration does not have enough staffs with the knowledge and resources necessary to understand them. The authors examine transfer pricing practices to provide relevant resources useful in designing tax incentives and regulation schemes for policy makers. This study focuses on identifying the relevant business and environmental factors that could influence the international transfer pricing of MEs. In this perspective, we empirically investigate how the management perception of related variables influences their choice of international transfer pricing methods. We believe that this research is particularly useful in the design of tax policy. Because it can concentrate on a few selected factors in consideration of the limited budget of the tax administration with assistance of this research. Data is composed of questionnaire responses from foreign firms in Korea with investment balances exceeding one million dollars in the end of 2004. We mailed questionnaires to 861 managers in charge of the accounting departments of each company, resulting in 121 valid responses. Seventy six percent of the sample firms are classified as small and medium sized enterprises with assets below 100 billion Korean won. Reviewing transfer pricing methods, cost-based transfer pricing is most popular showing that 60 firms have adopted it. The market-based method is used by 31 firms, and 13 firms have reported the resale-pricing method. Regarding the nationalities of foreign investors, the Japanese and the Americans constitute most of the sample. Logistic regressions have been performed for statistical analysis. The dependent variable is binary in that whether the method of international transfer pricing is a market-based method or a cost-based method. This type of binary classification is founded on the belief that the market-based method is evaluated as the relatively objective way of pricing compared with the cost-based methods. Cost-based pricing is assumed to give mangers flexibility in transfer pricing decisions. Therefore, local regulatory agencies are thought to prefer market-based pricing over cost-based pricing. Independent variables are composed of eight factors such as corporate tax rate, tariffs, relations with local tax authorities, tax audit, equity ratios of local investors, volume of internal trade, sales volume, and product life cycle. The first four variables are included in the model because taxation lies in the center of transfer pricing disputes. So identifying the impact of these variables in Korean business environments is much needed. Equity ratio is included to represent the interest of local partners. Volume of internal trade was sometimes employed in previous research to check the pricing behavior of managers, so we have followed these footsteps in this paper. Product life cycle is used as a surrogate of competition in local markets. Control variables are firm size and nationality of foreign investors. Firm size is controlled using dummy variables in that whether or not the specific firm is small and medium sized. This is because some researchers report that big firms show different behaviors compared with small and medium sized firms in transfer pricing. The other control variable is also expressed in dummy variable showing if the entrepreneur is the American or not. That's because some prior studies conclude that the American management style is different in that they limit branch manger's freedom of decision. Reviewing the statistical results, we have found that managers prefer the cost-based method over the market-based method as the importance of corporate taxes and tariffs increase. This result means that managers need flexibility to lessen the tax burden when they feel taxes are important. They also prefer the cost-based method as the product life cycle matures, which means that they support subsidiaries in local market competition using cost-based transfer pricing. On the contrary, as the relationship with local tax authorities becomes more important, managers prefer the market-based method. That is because market-based pricing is a better way to maintain good relations with the tax officials. Other variables like tax audit, volume of internal transactions, sales volume, and local equity ratio have shown only insignificant influence. Additionally, we have replaced two tax variables(corporate taxes and tariffs) with the data showing top marginal tax rate and mean tariff rates of each country, and have performed another regression to find if we could get different results compared with the former one. As a consequence, we have found something different on the part of mean tariffs, that shows only an insignificant influence on the dependent variable. We guess that each company in the sample pays tariffs with a specific rate applied only for one's own company, which could be located far from mean tariff rates. Therefore we have concluded we need a more detailed data that shows the tariffs of each company if we want to check the role of this variable. Considering that the present paper has heavily relied on questionnaires, an effort to build a reliable data base is needed for enhancing the research reliability.