• Journal of the Korea Society of Computer and Information
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• v.4 no.2
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• pp.155-163
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• 1999

This study is intended to analyze what trend the EVA technique recently actively studied shows according to the financial structure of the firm. As a result of analysis, it was found that the firm with the entire sum of its capitals depleted showed the negative value in both the EVA on the basis of operating profit and the EVA on the basis of cash flow from 5 years before its capitals were depleted. Especially, its EVA showed the negative value more strongly than the cash flow accruing by business activity. In analyzing the EVA of the firm with more than 1,500% of the debt to equity ratio, its EVA also showed the negative value from 5 years ago. But the firm with the good financial structure of the debt to equity of less than 35% showed the positive value in the EVA on the basis of its cash flow from 5 years ago. As can be seen from this result, the fact is that the firm can survive only when it raises its EVA through its structural change(re-engineering) and business innovation. Therefore, firms need to seek to turn their business philosophy or policy into the promotion of business innovation and business management emphasizing technology in order to improve their EVA indicators.

• KDI Journal of Economic Policy
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• v.24 no.1
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• pp.191-233
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• 2002

This paper is to examine some issues and policy direction of capital income taxation in Korea. Fundamental tax reform in US was reviewed to get some lessons for reforming the capital income taxation. One of main characteristics in Korea's capital income taxation is different treatment by corporation type, investment goods, and financial structures. Especially, the tax differential for debt and equity financing has been serious, as debt has been deducted as cost. We discuss that tax policy should try to satisfy the efficiency, equity, and simplicity under the structure of income based taxation for the time being. However, the changes of tax policies in advanced economies should be carefully examined, as Korea has the structure of small open economy. The current issue on the abolition of corporation income tax might be premature in logical structure and implementation. The US fundamental tax reform might be useful reference for determining the direction of capital income taxation in Korea, as it gives us some chances to discuss about tax base issue with income and consumption. Consumption based taxation is superior to income based taxation in the perspective of administrative and compliance costs. We should consider these tax costs for reforming capital income tax system in Korea.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.4
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• pp.263-276
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• 2021

This study examines the effect of international capital flows on corporate capital structures in Vietnam by analyzing panel data from all non-financial listed firms from 2005 to 2014 using pooled ordinary least square (OLS) with a variance estimator. The analysis includes a comparison of the signs and significance of the variable coefficients from the perking order and static trade-off theories to the empirical results to determine the optimum approach to the corporate capital structure given Vietnam's high-inflation environment. The results indicate that international capital flows have a positive relation to the debt ratio in the long term, and the relationship is more robust for 2005-2009 than for 2010-2014. Corporate capital structures adjusted to changes in the business environment in different sub-periods (2005-2009 and 2010-2014). When the economic environment became more favorable, the pecking order theory's predictive power increased, and that of trade-off theory lessened. Manufacturing and non-manufacturing firms required different capital structure decisions to fuel their operations and grow under foreign competition. The analysis demonstrates that firms should intensify their use of long-term debt relative to the availability of capital, which is an implication not only for firms in particular but also for industrial innovation overall.

• The Journal of Asian Finance, Economics and Business
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• v.9 no.9
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• pp.309-316
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• 2022

In 2011, the 4^th industrial revolution officially occurred and developed in most countries. The fourth industrial revolution has given organizations numerous business opportunities, enabling them to optimize their manufacturing processes, cut costs, and thereby improve their operations. The development of enterprises is a decisive factor in increasing national productivity, thereby improving economic growth and per capita income. Therefore, it is necessary to grasp the digital transformation plan and apply science and technology to domestic enterprises and improve the operational efficiency of the economy. Research on small and medium enterprises in Hanoi, Vietnam, which is considered a successful country in economic development and digital transformation and has become a middle-income economy and a highly open economy, the research results suggest that the ability to apply technology in businesses is capable of improving corporate financial performance. The choice of capital structure favoring debt has a negative effect on the financial performance of the enterprise; that is, enterprises in Vietnam should limit the choice of financing investment projects with debt, on the contrary, enterprises should choose to finance with equity. Finally, the study also discusses managerial implications for improving business performance in the context of the rapidly evolving 4.0 technology revolution.

• Journal of Korea Port Economic Association
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• v.38 no.2
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• pp.81-93
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• 2022

Since 2008, China's shipping industry has been in a slump, with shipbuilding orders falling sharply, and high-growth excess capacity has become increasingly apparent, leaving many firms with sharply reduced orders at risk of bankruptcy and shutdown. To ensure the development of the shipbuilding industry and enhance the international competitiveness of the shipbuilding industry, it is necessary to analyze the present situation of the shipbuilding industry and the financial situation of the shipbuilding enterprises. And analyzing the problems faced by enterprises from the perspective of capital structure is very meaningful to the shipbuilders with high capital operation. We are trying to analyze the determinants of capital structure of China's shipbuilding listed companies. 30 listed Chinese shipbuilding and listed companies have been designated as sample companies that can obtain financial statements for 13 consecutive years. They also divided 30 sample companies into shipbuilding, shipbuilding-related manufacturing, and shipbuilding-related transportation. Dependent variable is the debt level of the year, independent variable includes the debt level of the previous year, fixed asset ratio, profitability ratio, depreciation cost ratio and asset size. The regression model of the panel used to analyze determinants is capital structure. The results of the empirical analysis are as follows. First, a fixed-effect model for the entire entity showed that the debt-to-equity ratio and the size of the asset in the previous period had a positive effect on the debt-to-equity ratio in the current period. Second, the impact of the profitability ratio on the debt level in the prior term also supports the capital procurement ranking theory rather than the static counter-conflict theory. Third, it was shown that the ratio of the depreciation of the prior term, which replaces the non-liability tax effect, affects the debt-to-equity ratio in the current period.

• The Korean Journal of Financial Management
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• v.25 no.3
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• pp.155-173
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• 2008

Controlling for the impacts of main strands of debt maturity theories, we highlight the relationship between syndicated loan maturity and ownership structure of Korean borrowers. We find that as the ownership of large shareholders increases, the maturity of syndicated loans also increases. Additionally, we identify a negative relation between foreigners' ownership and loan maturity, indicating that foreign institutional investors serve valuable monitoring functions; as their equity shares increase, they fully take advantage of frequent renewals through the short maturity of syndicated loan. We also show that the predicted value of leverage is more systematically and positively related to the maturity of syndicated loan.

• Journal of Navigation and Port Research
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• v.37 no.2
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• pp.181-186
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• 2013

In a corporate financing, the decision of optimal capital structure is becoming more critical issues and still remaining a problem to be solved though many of researcher have studied. Particularly, shipping companies need a huge amount of capital finance for new vessel's capacity and then they are considering what is the best capital structure. In this point of view, this study tries to investigate the determinants of debit maturity structure focused on the Korean shipping industry. As results of panel regression analysis, firm size, liquidity, chance of growth, good cash flow are major determinants of debit expiration structure in the Korean shipping companies.

• The Korean Journal of Financial Management
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• v.23 no.2
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• pp.109-141
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• 2006

The central factor in the pecking order theory of financial structure is the asymmetric distribution of information between managers and less-informed outside investors. Myers and Majluf (1984) show that this asymmetry leads managers to prefer internal funds to external funds. Funds are raised through equity issues only after the capacity to issue debt has been exhausted. In contrast, according to static tradeoff theory, an optimum financial structure exists by the tradeoff between tax saving by debt and bankruptcy costs. This study examines the recent changes of Korean firms' financial structure and financing behavior and the determinants of financial structure. The sample of firms comes from the period of $1996{\sim}2004$, and the number of firms is 32,003. The major findings are as follows. First, in contrast with previous studies using US firms as sample, Korean firms have been using debt financing as their major financing instrument. Especially, the firms in the fund deficit situation relies much more on $long{\sim}term$ and $short{\sim}term$ debts rather than on equity issues. Second, as is the case with previous studies using US firms sample indicates, the financing deficit variable can not explain perfectly the net debt issue. However, compared with net equity issue variable, net debt issue variable is more closely related to the financing deficit variable. Third, when financing deficit variable is added to the current list of explanatory variables of financial structure determinants model, it has a significant and positive explanatory power. In addition, the coefficients of determinants are much improved. Thus, it is concluded that although pecking order theory is not perfect, it appears to be more useful compared to static tradeoff theory, at least in explaining the recent financing behavior of Korean manufacturing firms.

• KDI Journal of Economic Policy
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• v.26 no.1
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• pp.71-104
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• 2004

This paper explores the empirical performances of the workout companies with special interests in the effectiveness of corporate reorganizing tools on their revitalization. In the empirical analysis it considers the criteria of success or failure in restructuring from both creditors' and debtors' perspectives. The key results are summarized as follows. First, the initial conditions on the debt structure of the workout companies are significantly related to the revitalization from both creditors' and debtors' point of view. Second, the debt restructuring instruments are insignificant in the success of corporate turnarounds while the debt-to-equity conversion has been a relatively effective tool. Third, the self-restructuring efforts, employment downsizing and governance reshuffling do not affect the performances significantly. The higher importance of initial conditions than corporate restructuring efforts may imply that Korean corporate workouts serve better to the needs of creditor financial institutions which are to maximize debt recovery and of the government which is to overcome financial crisis.

• Journal of the Korea Academia-Industrial cooperation Society
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• v.19 no.3
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• pp.337-345
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• 2018

The purpose of this study is to analyze the relationship between the characteristics of Korean family firms and the impact of debt financing. The analysis period was 10 years from 2004 to 2013, and the sample consisted of 4,008 non-financial firms listed on the Korea Exchange. For the analysis, the unbalanced panel data with time - series, cross - section data were formed and analyzed using panel data regression analysis. The results are as follows. First, Korean family firms use relatively less debt than non - family firms. It can be understood that family firms in which the dominant family owns and dominates the corporation are less likely to increase their debt because the agent problem is alleviated and the need for the control effect of Jensen (1986) is lowered. Second, in the verification of the packing order theory using the model proposed by Shyam-Sunder and Myers (1999), family firms have higher compliance with the packing order theory than non-family firms do. When financing is needed, debt is preferred over equity issuance. However, for Korean family firms, 24.38% of the deficit funds are financed through the issuance of net debt, which is relatively low compared to the 75% shown in the analysis of Shyam-Sunder and Myers (1999). These results reveal the limit to the strong claim that the Korean family firms follow the packing order theory.