• The Korean Journal of Financial Management
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• v.27 no.1
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• pp.157-180
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• 2010

We try to check empirically whether the Korean banks produce valuable information for the firms listed in KOSDAQ. The sample covers 164 KOSDAQ firms which disclosed long-term bank loans for the period of October 2004 and March 2006. The result shows no abnormal stock returns from bank loan disclosures while the bond issuance indicates a negative abnormal return. In addition, when we control the effect of different debt levels of sample firms, we could not find any statistically significant effect of all types of borrowings. Results suggest that bank borrowings do not convey any favorable information on stock return and, as a result, bank loan is just one of several financing tools rather than a special event conveying good news for the firm under asymmetric information situation.

• International Area Studies Review
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• v.12 no.2
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• pp.27-53
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• 2008

This paper investigates factors determining the level of nontraditional activities at banks around the world. Specifically, the paper examines what kinds of firm-specific and country-specific characteristics determine the level of noninterest income using a comprehensive multi-country database. This paper focuses beyond the traditional U.S. based analyses and provides detailed asset-liability management practices of banks around the world.The findings suggest that banks' size and loan loss provision, explicit deposit insurance, banking restriction, banking freedom ranking of respective countries, the extent of state and foreign ownership, governance, and transparency of the country have positive effects on the level of nontraditional activities. Greater dependence on traditional lending and financing, market based economy, and multiple bank supervisory bodies in the country have negative associations with noninterest income. The economic development of country however affects the extent of the relationship.

• Management & Information Systems Review
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• v.37 no.1
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• pp.103-122
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• 2018

This paper expands the results of previous studies indicating that manager's ability positively affects business performance to analyze whether the degree to which the role of manager's ability improves business performance appears differently according to the characteristics of enterprises. As for the characteristics of enterprises, whether enterprises correspond to enterprises with high levels of funding constraints or late movers in the market is considered. Enterprises with high levels of funding constraints greatly require managers' roles not only for efficient use of funds but also for smooth financing. Late movers require more judgments of professional managers to overcome insufficient resources held and low profitability. In the case of enterprises with corporate characteristics with high dependency on the manager, the business performance is expected to greatly vary with the ability of the manager. The empirical analysis was conducted with listed companies from 2010 to 2014, manager's ability was measured by first measuring the efficiency of the entire enterprise through data envelopment analysis (DEA) using the methodology of Demerjian et al.(2012) and removing enterprise characteristics factors thereafter. Business performance was measured by the return on industrial fixed assets. The results of the empirical analysis indicated that the degree to which manager's ability improves business performance was higher in managerial competence enhances managerial performance in enterprises with high levels of funding constraints and late movers. Business performance is considered to have been improved further in cases where manager's ability is high because investments were made more efficiently through smooth funding. In addition, in the case of late movers in relatively poor environments, business performance was improved further because high manager's ability induced efficient decision making. In this paper, we extend the precedent study that the manager's ability improves the management performance, and confirm that the manager's ability to improve the managerial performance can be different according to the situation of the company. In addition, it is meaningful to analyze empirically whether a company's managerial ability is more important. This paper expanded the results of previous studies indicating that manager's ability improves performance to identify that the degree to which manager's ability improves business performance may appear differently according to situations in which enterprises are placed. In addition, this paper is meaningful in that it empirically analyzed what enterprises require manager's ability more importantly.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.19 no.3
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• pp.155-172
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• 2024

The COVID-19 pandemic not only posed an enormous human crisis, but also had a profound impact on firms' survival. Social distancing and global lockdown measures designed to protect human lives have paradoxically impaired the business environment. As a result, firms that sought to gain competitive advantage by leveraging external resources were cut off from the external world and faced unexpected challenges. Under these circumstances, researches were conducted in the early stage of the pandemic to explore how certain firms survived while others fell, but they were limited to re-examining business performance using traditional financial factors. However, this study aims to investigate the role of entrepreneurs' competency in crisis situations from the Resource-Based View (RBV), as such competency plays an important role in improving business performance and subsequently the probability of startups' survival. Specifically, we evaluated the performance as of end of 2019 of 1,127 startups evaluated by the Korea Technology Finance Corporation (KOTEC), which provides policy financing based on technology assessment, in 2016. We then conducted an empirical study to determine the mediating role of business performance in the relationship between entrepreneurial competencies and firm survival by verifying how many of the sample firms were still in operation at the end of June 2023, when the Korean government declared COVID-19 as an endemic. For this purpose, we defined technological, financial, and marketing competencies as the sub-factors of entrepreneurial competency, and sales growth rate and employment growth rate as the sub-factors of business performance. The results of the empirical analysis showed that technological and financial competencies of the entrepreneur had a positive impact on both business performance and firm survival, and that sales growth rate and employment growth rate mediated the relationship between technological competence and firm survival. However, the positive influence of entrepreneurs' financial competence of the survival of startups was only evident through the growth of employment. This study is the first study in South Korea to define the survival factors of startups in the context of the COVID-19 pandemic, and is expected to contribute to the theoretical and practical discussions on the importance of entrepreneurs' competency as a firms' survival factor based on RVB.

• Korean small business review
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• v.31 no.4
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• pp.67-93
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• 2009

The purpose of this paper is to explore the relations between financial constraints and dividend smoothing of innovative small and medium sized enterprises(SMEs) listed on Korea Securities Market and Kosdaq Market of Korea Exchange. The innovative SMEs is defined as the firms with high level of R&D intensity which is measured by (R&D investment/total sales) ratio, according to Chauvin and Hirschey (1993). The R&D investment plays an important role as the innovative driver that can increase the future growth opportunity and profitability of the firms. Therefore, the R&D investment have large, positive, and consistent influences on the market value of the firm. In this point of view, we expect that the innovative SMEs can adjust dividend payment faster than the noninnovative SMEs, on the ground of their future growth opportunity and profitability. And also, we expect that the financial unconstrained firms can adjust dividend payment faster than the financial constrained firms, on the ground of their financing ability of investment funds through the market accessibility. Aivazian et al.(2006) exert that the financial unconstrained firms with the high accessibility to capital market can adjust dividend payment faster than the financial constrained firms. We collect the sample firms among the total SMEs listed on Korea Securities Market and Kosdaq Market of Korea Exchange during the periods from January 1999 to December 2007 from the KIS Value Library database. The total number of firm-year observations of the total sample firms throughout the entire period is 5,544, the number of firm-year observations of the dividend firms is 2,919, and the number of firm-year observations of the non-dividend firms is 2,625. About 53%(or 2,919) of these total 5,544 observations involve firms that make a dividend payment. The dividend firms are divided into two groups according to the R&D intensity, such as the innovative SMEs with larger than median of R&D intensity and the noninnovative SMEs with smaller than median of R&D intensity. The number of firm-year observations of the innovative SMEs is 1,506, and the number of firm-year observations of the noninnovative SMEs is 1,413. Furthermore, the innovative SMEs are divided into two groups according to level of financial constraints, such as the financial unconstrained firms and the financial constrained firms. The number of firm-year observations of the former is 894, and the number of firm-year observations of the latter is 612. Although all available firm-year observations of the dividend firms are collected, deletions are made in the case of financial industries such as banks, securities company, insurance company, and other financial services company, because their capital structure and business style are widely different from the general manufacturing firms. The stock repurchase was involved in dividend payment because Grullon and Michaely (2002) examined the substitution hypothesis between dividends and stock repurchases. However, our data structure is an unbalanced panel data since there is no requirement that the firm-year observations data are all available for each firms during the entire periods from January 1999 to December 2007 from the KIS Value Library database. We firstly estimate the classic Lintner(1956) dividend adjustment model, where the decision to smooth dividend or to adopt a residual dividend policy depends on financial constraints measured by market accessibility. Lintner model indicates that firms maintain stable and long run target payout ratio, and that firms adjust partially the gap between current payout rato and target payout ratio each year. In the Lintner model, dependent variable is the current dividend per share(DPS_t), and independent variables are the past dividend per share(DPS_t-1) and the current earnings per share(EPS_t). We hypothesized that firms adjust partially the gap between the current dividend per share(DPS_t) and the target payout ratio(Ω) each year, when the past dividend per share(DPS_t-1) deviate from the target payout ratio(Ω). We secondly estimate the expansion model that extend the Lintner model by including the determinants suggested by the major theories of dividend, namely, residual dividend theory, dividend signaling theory, agency theory, catering theory, and transactions cost theory. In the expansion model, dependent variable is the current dividend per share(DPS_t), explanatory variables are the past dividend per share(DPS_t-1) and the current earnings per share(EPS_t), and control variables are the current capital expenditure ratio(CEA_t), the current leverage ratio(LEV_t), the current operating return on assets(ROA_t), the current business risk(RISK_t), the current trading volume turnover ratio(TURN_t), and the current dividend premium(DPREM_t). In these control variables, CEA_t, LEV_t, and ROA_t are the determinants suggested by the residual dividend theory and the agency theory, ROA_t and RISK_t are the determinants suggested by the dividend signaling theory, TURN_t is the determinant suggested by the transactions cost theory, and DPREM_t is the determinant suggested by the catering theory. Furthermore, we thirdly estimate the Lintner model and the expansion model by using the panel data of the financial unconstrained firms and the financial constrained firms, that are divided into two groups according to level of financial constraints. We expect that the financial unconstrained firms can adjust dividend payment faster than the financial constrained firms, because the former can finance more easily the investment funds through the market accessibility than the latter. We analyzed descriptive statistics such as mean, standard deviation, and median to delete the outliers from the panel data, conducted one way analysis of variance to check up the industry-specfic effects, and conducted difference test of firms characteristic variables between innovative SMEs and noninnovative SMEs as well as difference test of firms characteristic variables between financial unconstrained firms and financial constrained firms. We also conducted the correlation analysis and the variance inflation factors analysis to detect any multicollinearity among the independent variables. Both of the correlation coefficients and the variance inflation factors are roughly low to the extent that may be ignored the multicollinearity among the independent variables. Furthermore, we estimate both of the Lintner model and the expansion model using the panel regression analysis. We firstly test the time-specific effects and the firm-specific effects may be involved in our panel data through the Lagrange multiplier test that was proposed by Breusch and Pagan(1980), and secondly conduct Hausman test to prove that fixed effect model is fitter with our panel data than the random effect model. The main results of this study can be summarized as follows. The determinants suggested by the major theories of dividend, namely, residual dividend theory, dividend signaling theory, agency theory, catering theory, and transactions cost theory explain significantly the dividend policy of the innovative SMEs. Lintner model indicates that firms maintain stable and long run target payout ratio, and that firms adjust partially the gap between the current payout ratio and the target payout ratio each year. In the core variables of Lintner model, the past dividend per share has more effects to dividend smoothing than the current earnings per share. These results suggest that the innovative SMEs maintain stable and long run dividend policy which sustains the past dividend per share level without corporate special reasons. The main results show that dividend adjustment speed of the innovative SMEs is faster than that of the noninnovative SMEs. This means that the innovative SMEs with high level of R&D intensity can adjust dividend payment faster than the noninnovative SMEs, on the ground of their future growth opportunity and profitability. The other main results show that dividend adjustment speed of the financial unconstrained SMEs is faster than that of the financial constrained SMEs. This means that the financial unconstrained firms with high accessibility to capital market can adjust dividend payment faster than the financial constrained firms, on the ground of their financing ability of investment funds through the market accessibility. Futhermore, the other additional results show that dividend adjustment speed of the innovative SMEs classified by the Small and Medium Business Administration is faster than that of the unclassified SMEs. They are linked with various financial policies and services such as credit guaranteed service, policy fund for SMEs, venture investment fund, insurance program, and so on. In conclusion, the past dividend per share and the current earnings per share suggested by the Lintner model explain mainly dividend adjustment speed of the innovative SMEs, and also the financial constraints explain partially. Therefore, if managers can properly understand of the relations between financial constraints and dividend smoothing of innovative SMEs, they can maintain stable and long run dividend policy of the innovative SMEs through dividend smoothing. These are encouraging results for Korea government, that is, the Small and Medium Business Administration as it has implemented many policies to commit to the innovative SMEs. This paper may have a few limitations because it may be only early study about the relations between financial constraints and dividend smoothing of the innovative SMEs. Specifically, this paper may not adequately capture all of the subtle features of the innovative SMEs and the financial unconstrained SMEs. Therefore, we think that it is necessary to expand sample firms and control variables, and use more elaborate analysis methods in the future studies.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.19 no.4
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• pp.243-254
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• 2024

In recent years, as support for venture companies and performance increase, investment scale increases. To support them goverment operates venture firm confirmation system as a part of a variety of policies. Many studies suggest venture confirmation system offer the practical assistance on performance of venture companies. However, simply venture firm confirmation system affects on performance of venture companies. This study sought to develop a theoretical research model about the impact of innovation capabilities and industrial property rights on venture companies' financial performance and technological capabilities through the venture company confirmation system. The following hypotheses were tested. First, the innovation capabilities of venture companies such as development capability, manufacturing capability, marketing capability, level of cost leadership, level of high added value, degree of clarity of business model, and degree of innovation of business model have a significant impact on the venture company confirmation system. Second, the industrial property rights of venture companies, such as the number of domestic industrial property rights, foreign industrial property rights, industrial property rights in domestic applications, and industrial property rights in overseas applications, do not have a significant impact on the venture business confirmation system. Third, the benefits of the venture business confirmation system, such as promotion of technology development, advertising effects, tax benefits, securing excellent human resources, financing and investment incentives, advantageous participation in government support systems, and deregulation, are related to the financial performance of venture businesses such as sales and operating profit., net profit and technological level. Lastly, it was confirmed that, except for research and development type venture companies, innovation capabilities and industrial property rights do not have a significant impact on financial performance and technological capabilities through the venture confirmation system. The implications of this study mean that in situations where a company's innovation capabilities are lacking, the supply and demand of the venture business confirmation system is weak. Therefore, in order to improve the benefits of the venture business verification system, it is necessary to operate the venture business verification system benefits mainly for companies with high corporate capabilities. Next, it means that industrial property rights are not related to the venture business confirmation system. Therefore, there will be no need to consider industrial property rights as an important matter in the certification of the venture business verification system. Lastly, the higher the level of benefits from the venture business confirmation system, the greater the company's performance and technological capabilities. Therefore, efforts should be made to utilize the venture business verification system in a way that can improve performance or technology through the benefits of the venture business verification system.

• Korean small business review
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• v.42 no.2
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• pp.23-42
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• 2020

In this paper, it is analyzed that the financial factors of successful/unsuccessful companies in restructuring among Korean SMEs. For this purpose, the cases of 494 SMEs that had been subjected to workout programs due to financial distress between 2008-2014 were collected from A bank which is a SME financing bank, and had been subjected to logistic regression and t-test. And the sample cases are categorized into two groups, companies subject to external audit and the others, to provide more reliability. The result suggests; First, in all sample cases of SMEs, those are success factors for workout in connection with smaller total assets, lager sales amount, lower ratio of intangible assets, higher ratio of operating profit, lower ratio of short-term debt, higher ratio of long-term debt, and longer corporation history. Secondly, several factors have different influence on companies subject to external audit and the others. Lastly, the success factors for workout in Korean SMEs turned out to be different from those suggested in previous studies that are focused on large company. Some of the financial factors that led financially distressed firm to a successful restructuring showed the same results as large companies, but some of them were not related to them or even had the inverse influence on SMEs. This implies that SMEs have their distinctive success factors.

• Journal of the Korea Convergence Society
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• v.13 no.1
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• pp.341-348
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• 2022

This study analyzed the accounting conservatism of companies listed on KONEX. The analysis of the existing accounting conservatism presents the analysis results for the KOSPI market or the KOSDAQ market. However, in July 2013, Korea opened a new publicly traded market called KONEX, which has been continuously operated to increase the possibility of SMEs' financing. However, research on KONEX has not been conducted relatively actively, and the current prior research is also focused on earnings management. This study differs from previous studies in that it analyzes accounting conservatism, which is one of the accounting policies. For this purpose, the period from 2014 to 2020 was set as the analysis period, and empirical analysis was conducted using the asymmetric timeliness models, Ball and Shivakumar (2005) and Basu (1997). As a result of the analysis, conditional conservatism was also confirmed in the KONEX market. That is, it was confirmed that the timeliness of the bad news was higher than the good news. Second, no significant difference was found in the results of analyzing whether there is a difference in the conservatism of KONEX companies according to the size of the auditor. In other words, it was confirmed that the size of the auditor in the KONEX market is not a significant variable. This study expanded the existing research in that it analyzed accounting policies targeting the KONEX market.

• International Area Studies Review
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• v.22 no.3
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• pp.121-148
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• 2018

This paper examines the role of accounting conservatism on investment expenditure for non-financial Korean listed firms around the 2007-2008 global financial crisis using a differences-in-differences design. Specifically, this paper examines the association between an ex ante classification of firms by their level of accounting conservatism prior to the credit crisis and the ex post magnitude of the decline in investment. Consistent with prior literature, this study found that firms experienced a decline in their investment when hit by the financial crisis (Campello et al. 2010). And also this study found that firms with more conservative financial reporting experienced a smaller decline in investment activity following the financial crisis than did firms with less conservative financial reporting. Together, the results suggest that negative shocks to the supply of external finance hampers firm-level investment and that conservative financial reporting can lessen the sensitivity of firms' investment to such negative shocks. Next, this study shows that the magnitude of our findings is greater for firms more likely to suffer from underinvestment (as opposed to overinvestment). Firms that are financially constrained or have greater demand for external finance are more likely to experience underinvestment. Consistent with the predictions, this study finds stronger benefits of conservatism for firms that face relatively greater costs in raising external capital (i.e., financially constrained firms) or that have a relatively greater need to do so (i.e., firms that lack internal financial resources). This study also finds that the role for conservatism is greater in firms with a higher level of information asymmetry, consistent with the notion that conservatism mitigates financing frictions arising from information problems.