• The Journal of Industrial Distribution & Business
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• v.9 no.6
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• pp.49-55
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• 2018

Purpose - This paper examines the effect of related party transactions on crash firm-specific stock price crash risk. Ownership of a typical Korean conglomerate is concentrated in a single family. In those entities, management and board positions are often filled by family members. Therefore, a dominant shareholder can benefit from related party transactions. In Korea, firms have to report related party transactions in financial statement footnotes. However, those are not disclosed in detail. The more related party transactions are the greater information risk. Thus, companies with related party transactions are likely to experience stock price crashes. Research design, data, and methodology - 2,598 firm-year observations are used for the main analysis. Those samples are from TS2000 database from 2009 to 2013, and the database covers KOSPI-listed firms in Korea. The proxy for related party transactions (RTP) is calculated by dividing total transactions to the related-party by total sales. A dummy variable is used as a dependent variable (CRASH) in the regression model. Logistic regression is used to explain the relationship between related party transactions and crash risk. Then, the sample was separated into two groups; tunneling firms and propping firms. The relation between related party transactions and crash risk variances with features of the transaction were investigated. Results - Using a sample of KOSPI-listed firms in TS2000 database for the period of 2009-2013, I find that stock price crash risk increases as the trade volume of related-party transactions increases. Specifically, I find that the coefficient of RPT is significantly positive, supporting the prediction. In addition, this relationship is strong and robust in tunneling firms. Conclusions - The results report that firms with related party transactions are more likely to experience stock price crashes. The results mean that related party transactions increase the possibility of future stock price crashes by enlarging information asymmetry between controlling shareholders and minority shareholders. In case of tunneling, it could be seen that related party transactions are positively associated with stock crash risk. The result implies that the characteristic of the transaction influences crash risk. This study is related to a literature that investigates the effect of related party transactions on the stock market.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.8
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• pp.103-115
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• 2021

This study investigates the relationship between family ownership and the stock price crash risk. It believes that this relationship would never be in direct connection. The authors design and then find that family ownership is predisposed, in the first place, to the related party transaction, then the related party transaction causes the future stock price crash. This study infers that employing the power of family ownership creates the Type I agency problem, although this is not relevant for the Type II problem. From the perspective of the hoarding theory, family ownerships produce opaque accounts by blurring financial information. The blurred information is probably hidden in the related party transactions. This study, therefore, splits these transactions into accounts receivable, other accounts receivable and other receivables. Finally, this research concludes that the family ownership affects related party transactions. These then are used as an instrument to influence the leaded related party transaction. The latest, leaded related party transactions influence the future stock price crash. This study infers that related party transactions are abusive practices, especially on the types of receivables. It implies corporate governance's revitalisation.

• Asia-Pacific Journal of Business
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• v.13 no.1
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• pp.103-123
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• 2022

Purpose - This study investigates the effects of earnings management, related party transactions between chaebol affiliates on earnings management and ESG score on their profitability using return on assets (ROA). Design/Methodology/Approach - We use data including ESG (Environmental, Social, and Corporate Governance) score of the Korea Corporate Governance Service(KCGS), and financial data of 10,145 firm-year observations from the Total Solution 2000 (TS 2000) and Korea Companies-Information Service (KOKOInfo), and apply the finite lagged models to investigate the long-term effects of related party transactions between chaebol affiliates of earnings management on ESG scores and corporate performance. Furthermore, to take into consideration the simultaneous mutual effects on each other of main variables, we introduce finite distributed lags of five years. Findings - First, ESG-rated firms have a higher total asset return than non-ESG-rated firms. Second, chaebol firms have a higher profitability than non-chaebol firms. Third, profit management of related party transactions between affiliates within a chaebol has a positive effect on the short-term profitability and a negative effect on the long-term profitability. Fourth, chaebol ESG firms have a lower impact on profitability due to rating up (down) than non-chaebol ESG firms. Research Implications or Originality - Based on the above results, it can be concluded that firms used related party transactions for earnings management, the effects of related party transactions change over time, and chaebol firms manipulate earnings through related party transactions and ESG scores.

• Journal of Digital Convergence
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• v.15 no.1
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• pp.209-216
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• 2017

The merits and demerits of the chaebol in Korea has been subjected to considerable debate in recent years. In accounting research, many papers have been concentrating on tunneling that be designated as expropriation of minority shareholders by controlling shareholders. Although majority previous paper suggested related-party transaction has a negative effect to firm value, some research on related-party transaction argued it has a positive effect, also. We assume that they can't consider compositive meaning of related-party transaction and result of prior studies are mixed. In this setting, we investigate the relation between earnings management and related-party transaction which be known as strategy for tunneling by considering controlling shareholder's ownership.

• Journal of the Korea Academia-Industrial cooperation Society
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• v.19 no.9
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• pp.446-453
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• 2018

This study analyzed the effect of related party transactions on the corporate value of Korean firms using panel data regression analysis. We tested the efficient transaction hypothesis and conflict of interests hypothesis which concern related party transactions. Five types of related party transactions were considered, including long term supply contracts, assets and business transfers, affiliate loans, equity investment, and credit offerings. If related party transactions were conducted for the purpose of enhancing corporate efficiency, results would have a positive effect on firm value. If related party transactions were conducted for the purpose of private profits of the controlling shareholders, the results would show a negative effect on firm value. Results were as follows. Firstly, it is confirmed that affiliate loans, equity investment, and credit offerings had negative effects on firm value. This implies that these types of related party transactions used by controlling shareholders for the purpose of their private profit, which supports the conflict of interests hypothesis. Secondly, it was found that long term supply contracts and assets and business transfers had no effect on firm value.

• East Asian Journal of Business Economics (EAJBE)
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• v.9 no.1
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• pp.27-39
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• 2021

Purpose - According to the actual change of the logistics concept, the outsourcing activities of companies are actively progressing, and this is proceeding to third-party logistics and fourth-party logistics. This change in logistics situation raises the need for an in-depth understanding of four-party logistics. Research design, data, and methodology - In this study, first of all, the theoretical aspects of changes in the logistics concept are identified, along with the outsourcing and third-party logistics. Finally, the concept of four-party logistics, the background of its introduction, and future prospects will be explored. Result - The meaning of physical distribution is now passing through the existing three-party logistics and entering the era of four-way logistics. In addition, cost reduction and improvement of customer service through advanced logistics strategy can be said to be the company's competitiveness. Through this study, it can be seen that the conceptual change of logistics and the introduction of four-party logistics are closely related to the survival of the company's deficit in the market. Conclusion - In modern society, logistical competitiveness is the competitiveness of a company, and logistical activities of a company can be achieved through the process of entering the four-party logistics from the existing third-party logistics based on outsourcing. Then more customer-oriented service can be provided.

• East Asian Journal of Business Economics (EAJBE)
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• v.7 no.4
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• pp.15-26
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• 2019

Purpose - The purpose of this paper is to examine total logistics concept performed by 3^rd party logistics, managing with 4th party logistics to achieve more efficient and systematic dealing with sub-functions of physical distribution process. Research design and methodology - The research method to be adopted is first to review 3th party logistics providers that has attracted to various functions of 4PL, and then total logistics concept to be investigated which is related to 3 PL and 4 PL. Results - For the total logistics concept implemented by 3PL, management technique should be widen, then 3 PL's service activities and area should extend. Especially for the collaboration effects between the company and external organizations, it can be collaborated with some commitments in terms of their own independent activities, carrying on inherent functions by both 3PL and 4PL, pursuing total logistics concept. Conclusions - More areas of logistics service has been required by clients in the field, and service activities available is strongly related to roles of 3th party logistics providers as main player in logistics market. However, total logistics management is could be implemented by 3PL combining with various functions of logistics service offered by 4th logistics provider.

• Journal of Distribution Science
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• v.13 no.2
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• pp.25-33
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• 2015

Purpose - This study aims to disclose the problems of both the government and the logistics industry regarding fourth-party logistics, and to provide various solutions at the level of enterprises as well as the government for the introduction of fourth-party logistics in China. Research design, data, and methodology - This study aims to reveal how a shipping company recognizes the creation of partnerships with fourth-party logistics providers, and it reveals several related implications. Results - Fourth-party logistics organizations can be used to achieve maximum business performance as professional logistics companies by incorporating the benefits of outsourcing and insourcing. Outsourcing logistics services through focusing on core competencies and improving customer service can have financial effects and advantages such as the simplification of labor issues. Conclusions - This study did not investigate Korean enterprises through an empirical analysis and provided fourth-party logistics concepts and promotional plans according to domestic and foreign literature. Further studies shall investigate not only the Korean fourth-party logistics model but also the training of logistics professionals to generate profits for both shippers as well as logistics enterprises.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.40 no.2
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• pp.137-144
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• 2017

The business process of global third party logistics company is defined as a network of logistics activities which involves the products that are manufactured in the developing countries, such as Vietnam, China and so on, and delivered to North or South American countries via intermediate stopover sites. The third party logistics company usually uses proprietary logistics information system to support the related logistics activities. However, each consignor sometimes may require different business process based on the customer type or characteristics of their products. Therefore, the third party logistics company need to modify their business process to reflect customer's requirements, resulting in the modification of logistic information systems and additional costs. Therefore, a flexible mechanism is required to efficiently support the various types of requirements by the owners of the products. In this paper, first, we figured out various business rules related to third party global logistics activities. Second, we grouped the identified business rules into business processes, objects, relations, dependency, policy, representations, execution, and resources and further into precondition, postcondition, and invariant based on checking point in time. Furthermore, the categorized rules are classified into inter-activity and intra-activity rules based on the execution range. Third, we proposed a rule syntax to describe the defined rules into scripts which are understood by user and information system together. When each activity is executed, the rule manager checks whether there are rules related with the activity execution. Finally, we developed a prototype rule management system to show the feasibility of our proposed methodology and to validate it with an example.

• KSII Transactions on Internet and Information Systems (TIIS)
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• v.11 no.12
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• pp.6188-6204
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• 2017

Over the years, more password-based authentication key agreement schemes using chaotic maps were susceptible to attack by off-line password guess attack. This work approaches this problem by a new method--new theorem of chaotic maps: $T_{a+b}(X)+T_{a-b}(X)=2T_a(X)T_b(X)$,(a>b). In fact, this method can be used to design two-party, three-party, even in N-party intelligently. For the sake of brevity and readability, only a two-party instance: a novel Two-party Password-Authenticated Key Agreement Protocol is proposed for resisting password guess attack in this work. Compared with the related literatures recently, our proposed scheme can be not only own high efficiency and unique functionality, but is also robust to various attacks and achieves perfect forward secrecy. For capturing improved ratio of security and efficiency intuitively, the paper firstly proposes a new parameter called security/efficiency ratio(S/E Ratio). The higher the value of the S/E Ratio, the better it is. Finally, we give the security proof and the efficiency analysis of our proposed scheme.