• Journal of Korea Trade
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• v.23 no.7
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• pp.113-127
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• 2019

Purpose - This paper investigates whether financial crises could be the indicators of capital outflow waves or vice versa in Korea. Korea has experienced two severe financial crises, which are the Asian Crisis and the global financial crisis. Although there were many variables associated with these two remarkable events, one notable variable was gross capital outflows, which had significantly increased around them. Motivated by existing literature which built theoretical frameworks explaining the relationship between capital flight and financial crises, we examine the empirical evidence for this relationship. Design/methodology - We use panel data from 61 countries including Korea from 1980 to 2009 to study the associations between capital flight and diverse financial crises such as banking, currency, debt, and inflation crises. To be specific, we use the complementary log-log model to see whether capital outflow waves are reliable indicators for domestic financial crises. Findings - The results show, first, that banking, currency, and inflation crises are associated with capital flight. Second, debt crises are also associated with capital flight, but the result is not robust to different specifications. And, third, the positive associations between capital flight and crises are mainly driven by banking flows rather than FDI and portfolio flows. Originality/value - This paper is one of a few studies that investigates domestic (not foreign) investors' behavior during financial turmoil. Furthermore, theoretical studies which provide contradictory explanations on the movements of gross capital outflows during financial crises emphasizes the importance of empirical evidence in this paper.

• The Journal of the Korea Contents Association
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• v.18 no.4
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• pp.444-453
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• 2018

The study addresses the analysis on the financial determinants of corporate research and development (R&D) expenditure in finance. Overall level of R&D spending was estimated as one of the top-tier on a global basis and a majority of the expenditure was invested by large domestic firms in private sector. Consequently, financial factors that influence R&D intensity were empirically tested in the first hypothesis by using conditional quantile regression model for firms listed in KOSPI stock market in the post-era of the global financial turmoil. Firms in the groups of high- and low-R&D intensity were statistically compared to detect financial differences in the second hypothesis which was accompanied by the test of multi-logit model that included firms without R&D outlay. Concerning the results of the hypothesis tests, R&D spending of the prior fiscal year, firm size, business risk and advertising expense overall showed statistically significant impacts to determine the level. As an extended study of [1] that had examined financial factors of R&D intensity at the macro-level, the results of the present study are anticipated to contribute to maximizing shareholders' wealth in advance or emerging capital markets, when applied to find an optimal level of R&D expenditure.

• Journal of the Korea Academia-Industrial cooperation Society
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• v.20 no.5
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• pp.352-362
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• 2019

The study investigates one of the long-standing, but still controversial issues in modern finance from the international and domestic perspectives. That is, financial components and differences on corporate profitability are identified and compared under the primary hypotheses. Empirical research settings include the sample data as KOSPI-listed chaebol firms, time reference covering the post-era of the global financial turmoil and two differently defined profitability indices measured by the market- and the book-value bases. A majority of total 7 explanatory variables except firm size and leverage ratio reveal their statistically significant power to explain profitability indices for the chaebol firms in the first hypothesis. The results are generally compatible with those obtained from their counterparts of non-chaebol firms. In the second hypothesis applying multinomial logistic model, the chaebol firms are classified into three groups according to the level of profitability. It is then confirmed that variables to represent the market-valued debt ratio, business risk and growth potential are financially discriminating factors among the three groups. The study may provide a new vision to identify financial factors of corporate profitability for Korean chaebol firms after the global financial crisis, which can enhance the benefits of interested parties at the government or corporate level in a virtuous cycle.

• Journal of the Korean Data Analysis Society
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• v.20 no.6
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• pp.2771-2779
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• 2018

The recent financial crises cause the co-movement and transmit the risk across different markets and assets. It is well known that market fear affects the quality of credit in the financial markets. In this context, this study examines the co-movement between the volatility index (VIX) of the Chicago Board Options Exchange (CBOE), or VIX, and six emerging countries' credit default swaps (CDSs), by implementing wavelet coherence. Our research aims at revealing whether the VIX can be used to hedge against the bubble behavior of the CDS market in different investment holding periods (short-run, medium-run, and long-run), as well as whether either market can be used to manage and hedge overall market downside risks. The wavelet coherence results show a high degree of co-movement between the VIX and CDS during the 2007-2009 global financial crisis, across the 16-64 weeks' frequency band. In addition, we observe that the positive correlation between the VIX and the CDS markets, implying that the market turmoil intensifies the co-movement between the VIX and CDS markets.

• The Journal of the Korea Contents Association
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• v.16 no.2
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• pp.729-739
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• 2016

The primary objective of implementing the study was to further investigate any pronounced financial components affecting the level of cash retention for the Korean chaebol firms. The research was framed to test for two hypotheses on the cash savings with utilizing the chaebol firms during the post-era of the global financial turmoil (from 2009 to 2013). In the first hypothesis test, any significant explanatory variables relative to the cash holdings, were identified in each corresponding category of the conditional quantile regression (CQR) model, while multilogistic regression analysis was performed to discriminate relevant financial factors in each pair of classes consisting of the chaebol firms. Concerning the results, liquidity, agency costs, and cash conversion cycle were found to be statistically significant in the majority of classified categories in the former test and liquidy, firm size, and dividend yield, also showed discriminating powers in each pair of categorical for the firms in the latter test.

• 한국정보디스플레이학회:학술대회논문집
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• 2008.10a
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• pp.3-3
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• 2008

The TFT-LCD industry has shown dramatic growth by making technological advances and satisfying consumer needs. It now stands at the heart of the display industry. However, the TFT-LCD market is maturing and is unlikely to sustain the fast pace of growth in years to come. There has been an oversupply in the LCD sector entering 2008 due to capacity expansion aimed at fueling growth coupled with softening demand amid the global economic slowdown and recent financial turmoil. The LCD industry has successfully coped with oversupply on several occasions. Each time, LCD makers faced up to the challenge and responded with a pioneering spirit. They continued to grow by turning crisis into opportunity. LG Display aims to create new markets by developing products based on innovative technology and providing more attractive products through a value-added product planning that incorporates consumer needs. Through a continuous cost innovation targeted at stimulating demand by making products more economical to consumers, we will be at the forefront of overcoming the current oversupply and sustaining robust growth for the TFT-LCD industry. Depending on our management of the situation, the current oversupply could prove to be an opportunity to create even bigger markets for the future.

• The Journal of the Korea Contents Association
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• v.15 no.10
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• pp.504-516
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• 2015

This study addresses one of the curent issues in modern finance, which investigates financial profile on the levels of the chaebol firms' cash hoardings in the domestic capital market. Iit may be imperative to search for robust and consistent financial determinants of cash holdings as well as identifying any changes or trend of the determinants affecting the corporate cash reserves in the post-era of the global financial turmoil, considering that interest parties at the government and corporate levels, still seem to have a controversy or debate on excess cash savings. Two hypotheses were postulated and empirically tested for the chaebol firms in the study, such as any transitional changes of the relevant factors on cash holdings and unique attributes of financial factors discriminating between the different type of domestic stock markets.

• KDI Journal of Economic Policy
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• v.34 no.1
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• pp.29-52
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• 2012

During the global financial turmoil in 2007-2008, deviation from the covered interest parity (CIP) between the Korean won and US dollar through the foreign exchange swap has escalated in its magnitude beyond 1,000bp in November 2008, and it still persists around 100bp level. In this paper, we examine a newly developed margin based asset pricing model using Kalman filter approach and show that the escalation of the CIP deviation is found to be significantly related to the global dollar funding illiquidity and country-specific funding conditions. Furthermore, we find evidence that the poor funding conditions (or higher margins) are driven by the general money market illiquidity and may lead to higher funding illiquidity, which suggests the reinforcing effects of the liquidity spiral. We also show that the supply of dollar liquidity and improved funding conditions help alleviate the deviations from the parity, however the persistent anomaly is found to be related to the high level of volatility in the FX swap market.

• Journal of the Korea Academia-Industrial cooperation Society
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• v.19 no.7
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• pp.174-182
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• 2018

Given the ongoing debate in many aspects of finance, more attention may need to focus on corporate R&D expenditures. This study empirically tests financial determinants of R&D expenditures for NYSE-listed and KOSPI-listed firms. Three major hypotheses were postulated to test for corporate R&D outlay. First, proposed variables such as one-year lagged R&D expenditures, market value based leverage, profitability and cash holdings showed significant influence on corporate R&D costs for the sample firms. Moreover, financial factors inclusive of squared one-year lagged R&D expenditures, the interaction effect between one-lagged R&D expenditures and high-growth firm, non-debt tax shield, Tobin's q and a dummy variable to explain differences in accounting treatment between the U.S. and Korea, revealed significant differences between the two samples. Finally, in the conditional quantile regression (CQR) analysis for the R&D-related variables in relation to corporate growth rate, it was found that the NYSE-listed firms had a statistically significant linkage between growth potential and one-year lagged R&D expenditures at lower quantile levels. This study may shed new light on identifying financial factors affecting differences between the U.S. market (as an advanced market) and the Korean market (as an emerging market) regarding the optimal level of R&D investments for shareholders.

• Journal of the Korea Academia-Industrial cooperation Society
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• v.21 no.5
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• pp.179-190
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• 2020

This research analyses the financial characteristics of corporate R&D intensity in the Korean capital market. It is important to pay greater attention to this subject, given the current situation of the shortage of core components domestically in Korea. Three hypotheses are postulated to investigate the financial factors of R&D investments for KOSDAQ-listed firms during the post-era of the global financial turmoil. By applying a conditional quantile regression (CQR) model, three variables included R&D intensity in the previous year (Lag_RD), the squared term of Lag_RD, and interaction between the high-tech sector and Lag_Rd, reveal significant effects on the current R&D ratio. Whereas more than half of the total variables show variable impacts between firms with higher and lower R&D intensity, only Lag_RD and squared term of Lag_RD were found to be significant. It is expected that these results may contribute to being financial catalysts for an optimal level of R&D expenditures, thereby maximizing firm value for shareholders in KOSDAQ-listed firms.