• 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.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.17 no.1
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• pp.177-189
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• 2022

This study proposes policy recommendations for the Korea New Exchange ("KONEX"), which is a financial platform for SMEs and startups that relied on indirect and policy financing in the past. SMEs and venture firms with limited human and physical listing resources can grow through market incubation, and venture capitalists expect an early exit or return on investment. However, the lack of liquidity and sluggish trading volume have weakened the function of the market. Despite prior policy efforts, the number of newly listed companies has decreased while listing demand for KOSDAQ and K-OTC has increased. This study aims to suggest short- and long-term improvements in regulations and throughout the KONEX firms' listing life cycle. First, the minimum deposit requirement on individual investors should be abolished to increase the number of investors. Second, information disclosure should be conducted by firms so that the nominated advisor can focus on discovering and supporting new listed companies. Third, in order to increase trading volume, the 5% dispersion rule should be changed to 25% dispersion incentive principle. Fourth, a new track without profit condition in expedited transfer listing should be introduced because the KOSDAQ relaxes the profit realization requirements for listing. Lastly, transfer listing without additional review for firms that fulfill ownership dispersion, information disclosure, and investor protection will strengthen the incubating role of the KONEX.

• The Journal of Small Business Innovation
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• v.20 no.3
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• pp.1-17
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• 2017

There is a serious information asymmetry between internal managers and outside investors in the process during IPOs. One mechanism that mitigates this information asymmetry is a high quality auditor. Since prior research document auditors' effect on newly listed firms at the IPO year, what has not yet been revealed in previous studies is the behavior of firms and auditors after listing. In this study, we investigate (i) the firms tendency of contracting with Big N auditors, and (ii) the effect of Big N auditors on accounting quality after the years of IPOs. Using a sample of 7,678 (1,892 firm-years of after IPOs, and 5,786 control firm-years) KOSDAQ observations between 2002 and 2012, we find that the likelihood of contracting with Big N auditor lasts only for two years after IPO compare to that of non-IPO control years. Secondly, we find that the effect of Big N auditors on clients' earnings management lasts for a very short period after IPO. These findings suggest that although prior literature argue that Big N auditors reduce earnings management of their clients, at least the period right after IPO, it is not consistent. Our study contributes to the existing literature in several ways. First, we provide new evidences of firms' auditor selection decisions by investigating years after the listing. In second, as an evidence of accruals reversal, we document decrease in discretionary accruals after IPOs. Third, we find that there is not always a positive relation between Big N auditor and accounting quality by showing the insignificant Big N auditor effect after IPOs. Our results also suggest several implications to IPO related stakeholders. First, to IPO firms, we provide evidences that decisions of hiring auditors affect firms earnings. Also, lead IPO underwriters may consider how these decisions influence future performance. Second, investors may want to use information not only in the preofferings but also after public offerings. Our study insists that auditor hiring decisions affects their own welfare. Finally, accounting standard setters may find these results useful for evaluating how much discretion they should allow corporate managers to hire auditors. In addition, our result casts doubt on auditor designation.

• Journal of Distribution Science
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• v.12 no.10
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• pp.75-84
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• 2014

Purpose - This article aims to examine whether the stock issuance of firms in the retail industry follows Myers' (1984) pecking order theory, which is based on information asymmetry. According to the pecking order model, firms have a sequence of financing decisions, of which the first choice is to use retained earnings, the second one is to get into safe debt, the next involves risky debt, and the last involves finance with outside equity. Since the 2000s, the polarization of the LEs (Large enterprises) and SMEs (Small and Medium Enterprises) arose in the retail industry. The LEs exhibited an improvement in growth and profitability, whereas SMEs had a tendency to degenerate. This study contributes to corroborating the features of financing decisions in the retail industry distinguished from the other industries. Research design, data, and methodology - This study considers the stocks listed on the KOSPI and KOSDAQ markets from 1991 to 2013, and is more concentrated on the stocks in the retail industry. The data were collected from the financial information company, WISEfn. The empirical analysis is conducted by employing two measures of net equity issues (and), which were introduced in Fama and French (2005), and can be calculated from firms' accounting information. All variables are generated as the aggregate value of the numerator divided by aggregate assets, which, in effect, treats the entire sample as a single firm. Substantially, the financing decisions of the firms were analyzed by examining how often and under what circumstances firms issue and repurchase equity. Then, this study compares the features of the retail industry with those of the other industries. Results - The proportion of sample firms that show annual net stock issues reaching the level of the year's average was 54.33% for the 1990s, and fell to 39.93% per year for the 2000s. In detail, the fraction of the small firms actually increases from 45.08% to 51.04%, whereas that of large firms shows a dramatic decline from 58.94% to 24.76%. Considering the fact that the large firms' rapid increase in growth after the 2000s may lead to an increase in equity issues, this result is rather surprising. Meanwhile, net stock repurchases of assets are considerably disproportionate between the large (-50.11%) and the small firms (-15.66%) for the 2000s. Conclusions - Stock issuance of retail firms is not in line with the traditional seasoned equity offering based on information asymmetry. The net stock issuance of the small firms in the retail industry can be interpreted as part of an effort to reorganize business and solicit new investment to resolve degenerating business performance. For large firms, on the other hand, the net repurchase can be regarded as part of an effort to rearrange business for efficiency and amplifying synergy across business sections through spin-off. These results can help the government establish a support policy on retail industry according to size.

• The Journal of Industrial Distribution & Business
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• v.10 no.6
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• pp.51-58
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• 2019

Purpose - Prior studies reported that the opacity of information caused stock price crash. If managers fail to disclose unfavorable information about the firm over a long period of time, the stock price is overvalued compared to its original value. If the accumulated information reaches a critical point and spreads quickly to the market, the stock price plunges. Information management by management's disclosure policy can cause information uncertainty, which will lead to a plunge in stock prices in the future. Thus, this study aims at examining the impact of disclosure quality on crash risk by focusing on the unfaithful disclosure firms. Research design, data, and methodology - This study covers firms listed on KOSPI and KOSDAQ from 2004 to 2013. Firms excluded from the sample are non-December firms, capital-eroding firms, and financial firms. The financial data used in the research was extracted from the KIS-Value and TS2000 database. Unfaithful disclosure firm designation data was collected from the Korea Exchange's electronic disclosure system (kind.krx.co.kr). Stock crash is measured as a dummy variable that equals one if a firm experiences at least one crash week over the fiscal year, and zero otherwise. Results - Empirical results as to the relation between unfaithful disclosure corporation designation and stock price crashes are as follows: There was a significant positive association between unfaithful disclosure corporation designation and stock price crash. This result supports the hypothesis that firms that have previously exhibited unfaithful disclosure behavior are more likely to suffer stock price plunges due to information asymmetry. Second, stock price crashes due to unfaithful disclosures are more likely to occur in Chaebol firms. Conclusions - While previous studies used estimates as a proxy for information opacity, this study used an objective measure such as unfaithful disclosure corporation designation. The designation by Korea Exchange is an objective evidence that the firm attempted to conceal and distort information in the previous year. The results of this study suggest that capital market investors need to investigate firms' disclosure behaviors.

• The Journal of the Korea Contents Association
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• v.9 no.3
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• pp.305-311
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• 2009

The bankruptcy in Korea affects to all stakeholder of firms. Companies listed in KOSDAQ have high technology but the possibilities for success of business are low. The purpose of this study is to develop and to applicate falling prediction model of KOSDAQ firms using logistic regression analysis. The results of this study are as follows. First, the accuracy of classification of the models by years was between 76.5% and 77.5%, and that of the mean model was between 70.6% and 83.4%. Among the models, the mean model of -three years, -two years, and -one year was highest in the accuracy of classification (83.4%). Second, when the mean model of -three year, -two years, and -one years, the highest model in accuracy of classification, was selected to be verified on validation samples, the accuracy of prediction increased from -three years to -one year (71.7% for -three years, 75.0% for -two years, 90.0% for -one year). In indicating the superiority of developed model.

• Journal of Advanced Navigation Technology
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• v.16 no.6
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• pp.1116-1122
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• 2012

Many researches predicted the linear relationship between discretionary expenditure and sales amount in manufacturing companies. We review their relationship based on financial reports of KOSDAQ and KOSPI listed companies in category of non-durable goods. Also we review the relationship between expenditure on intangible capital and sales amount in aviation service and related manufacturing firms. Identified manufacturing firms showed linear relationship between R&D expenditure and sales amount. On the contrary, aviation service and related manufacturing companies do not have linear relationship between expenditure on intangible capital and sales, while their general management and sales expenditure has linear relationship with sales. It shows aviation service and related manufacturing company keep advertising or R&D related expenditure as sales revenue decreases, while manufacturing companies of non-durable goods has a tendency to reduce it as sales revenue decreases.

• Korean Management Science Review
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• v.17 no.3
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• pp.119-129
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• 2000

Design of web site must include community considerations alongside technical design aspects. The main purposes of this study are to identify the community criteria for evaluating web site and to examine how business web sites include the community factors. To identify the evaluation criteria, the author reviewed recent literatures and made a table showing a summary result(see Table 1). appendix shows a sample form NASDAQ(n=82) and KOSDAQ(n=59) which were evaluated. Using the evaluation from with 189 items(Table 3), all sites were visited and review between August 28, 2000 and September 6, 2000. The auther’s evaluations were done from the perspective of community building in business sector. Table 4, summary data on the results of the study, shows that the level of application of the community concept is very low. Among the listed 18 items, only a few items are utilized at more than 50% level. Less than 10% items are Member Profile, Group Segmentation, Backstory, Forum, Chat, Fact-to-face Meeting, and Collaborative Design. the unbalanced utilization due to the lack of community concept in businesses are found. Korea firms are superior to NASDAQ firms in terms of Bulletin Board and FAQ; But Korean firms are inferior and remain at very low level in terms of Member Login, Education Materials, Backstory, Forum, and Integrating Off-line Activities which are core factors of community building.

• Knowledge Management Research
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• v.13 no.5
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• pp.1-13
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• 2012

This study investigates whether firm-specifics affect forecast accuracy using a sample of IPO firms in Korea. The forecasts accuracy can be differentiated depending on firm specifics. This study uses the foreign investor, intangible asset and patents as firm specifics. The analysts are divided into two groups by firm-specifies(foreign investors ratio of low and high, intangible asset ratio of low and high, patents of acquisition) and also examine the degree of analysts's forecast accuracy over the two groups. and examined the degree of the analysts' forecast accuracy over the two groups. The sample is composed of 460 IPO (Initial Public Offering) firms listed on the KOSDAQ (Korean Securities Dealers Automated Quotations) for the period from 2001 to 2009. The analysts' forecast accuracy is much higher in the group of high foreign investor but is lower in the group of high intangible assets and patents. Also, the group of high foreign investors respectively interacts with group of high intangible assets ratio and group of patents of acquisition. In result, The analysts' forecast accuracy is higher because foreign investor is decreased information asymmetry. This study compares suggests that patents may be helpful for predicting forecast accuracy.

• Journal of East Asia Management
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• v.3 no.1
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• pp.25-40
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• 2022

This study investigates the effect of labor union and its power on information opacity. Given that the information opacity ultimately leads to the stock price crash, this study examines the relationship between labor unions and future stock price crash risk. Further, by assuming a strike by labor union as the actual power of the unionization in firms, whether labor union's power subrogated by the activity (i.e., a strike) makes a significant difference in the likelihood of future stock price crash between unionized firms is also examined. The work place survey data provided by Korea Labor Institute is used to test the hypotheses. The data is for the periods of 2004 - 2012 on firms listed on Korea Stock Exchange and KOSDAQ. The results show that while labor unionization has a positive impact on future stock price crash risk, on which labor union's power has a negative impact. This means that the existence of labor union itself might facilitate firm's information to be opaque by tolerating manager opportunism, while its power mitigates the managerial opportunism, which leads to lower future stock price crash risk. This study adds to the literature on the role of labor unions as nonfinancial stakeholders and its power in accounting environment, and also on the determinants of stock price crash. It is also valuable to examine the unions' role in terms of the economic consequences of both presence and power of the labor unions.