• Journal of Korea Trade
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• v.23 no.6
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• pp.66-92
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• 2019

Purpose - Foreign Exchange Rates (FER) have been one of the most significant factors for both Korean exporters and the economy of Korea. The purpose of this study is to evaluate whether exporters with a high level of Exchange Rate Elasticity of Sales (ERES) make the use of earnings management for Income Smoothing (IS). Design/methodology - Income smoothing was obtained using the methodology suggested by Leuz, Nanda and Wysocki (2003). Accruals-based Earnings Management (AEM) was estimated using Discretionary Accruals (DA) calculated by the operant Jones Model developed by Dechow, Sloan and Sweeney (1995). Real Earnings Management (REM) was obtained using the methodologies suggested by Roychowdhury (2006) and Cohen and Zarowin (2010). Data were 2,402 firm years of public listed companies on the KRX, which were not in the financial industry and had a settlement of accounts in December for the period from 2013 to 2017. Findings - Results of the evaluation are as follows. First, companies with higher levels of ERES have relatively lower levels of smoothing of reported income. This might be because a fluctuation in sales caused by an exchange rate fluctuation has a direct impact on the volatility of the reported income. Second, companies with high levels of both ERES and IS have a positive correlation with both AEM and REM. This might be because companies with high levels of IS engage in earnings management to smooth reported income. Specifically, it is possible to assume that for smoothing the reported income, not only AEM but also REM is practiced. Third, companies with high levels of ERES but low levels of IS have a negative correlation with both AEM and REM. This could be interpreted as companies exhibiting low levels of IS due to higher levels of ERES tend to control IS. In addition, such results were supported by firms relying highly on exporting, and are consequently sensitive to exchange rate fluctuation. Therefore, it may conclude that companies with high levels of ERES make the use of earnings management as a means of IS. Originality/value - This study can find its significance from the fact that it is the first study, empirically verifying that companies of Korea, where exportation is a large part, use both AEM and REM as a means for smoothing reported income upon facing exchange rate fluctuations. In addition, it is highly expected that the results of this study could be useful for participants of financial markets when making IS-related decisions.

• Journal of Korea Trade
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• v.24 no.8
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• pp.153-170
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• 2020

Purpose - As the US-China trade war intensifies and lasts long time, there is growing concern about its potential effects on the global economy. In particular, for the countries like Korea that have a large economic dependence on the economy of the two countries, the US-China trade war may have a great repercussion in many ways. The aim of this paper is to investigate the global productivity and market structure implications of the US-China trade war for Korea, as well as for other surrounding countries and regions. Design/methodology - In this paper, we develop a full multi-country/region multi-sector computable general equilibrium (CGE) model of global trade incorporating heterogeneous workers and firms in individual skill levels and used technologies. We then calibrate the model using a global Social Accounting Matrix (SAM) dataset extracted from the recently released GTAP 10 Database, and assess the potential effects of the US-China trade war on the aggregate real productivity and the market structure for Korea, as well as for other surrounding countries and regions. Findings - We show that the US-China trade war may largely affect the aggregate productivity in each sector in each country/region, as well as the global market structure through entry and exit of firms, which results finally in considerable changes in the industrial comparative advantage of each country/region. Though the effects are diverse sector by sector, the results show that Korea may also be affected significantly: concerning the real productivity implications, it is shown that the machinery industry may be affected the most negatively; on the other hand, it is shown that the number of exporting firms may decrease the most in the other transports industry. Originality/value - As the US-China trade war intensifies, many studies have tried to estimate the possible implications, and for this usually the CGE models have largely been used as the standard tool for evaluating the impacts of changes in trade policies. Standard CGE models, however, cannot be used to assess the global productivity and market structure implications due to the symmetric and simplified base assumptions. This paper is the first to analyze and quantify the possible impacts of the US-China trade war on the aggregate productivity and global market structure using a CGE model incorporating endogenous skill-technology assignment of heterogeneous workers and firms.

• KOREAN JOURNAL OF CROP SCIENCE
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• v.68 no.4
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• pp.262-275
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• 2023

This study aimed to assess the preferences of African, American, and Asian panels, in comparison to a Korean panel, for various Korean rice varieties, including three japonica, two indica, and one Tongil-type, all developed by the Rural Development Administration in Korea. Regarding rice appearance, most panelists, except for the Koreans, favored long and slender rice varieties like 'Hanyeol', 'Hyangyeol', and 'Amissal'. In contrast, the Koreans preferred wider varieties like 'Sindongjin' and 'Deuraehyang'. Notably, the overseas panelists consistently favored rice varieties with high appearance quality in sensory evaluations of cooked rice. Both overseas and Korean panelists strongly preferred the indica rice variety 'Hanyeol' in terms of appearance quality and sensory evaluations. However, Korean rice varieties like 'Amissal' and 'Sindongjin' scored high in appearance quality with overseas panelists but received low ratings in sensory aspects, including shape, stickiness, and taste, compared to those for 'Hanyeol'. This suggests that considering sensory characteristics is important when exporting Korean rice varieties. Regarding taste characteristics preferred by the panelists derived from the correlation analysis between taste traits, Africans preferred rice with a smooth texture and no stickiness, especially favoring long-grain rice. Americans leaned towards rice with a slightly firm texture, some stickiness, and late aging characteristics. Asians preferred rice with a smooth texture, low stickiness, and long-grain varieties. In contrast, Koreans favored round rice with a glossy appearance, a slightly firm texture, late aging traits, and some stickiness. These research findings can serve as valuable data for the development of rice varieties for overseas markets and are expected to contribute to securing competitiveness in international markets.