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

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

• Journal of Digital Convergence
• /
• v.15 no.1
• /
• pp.209-216
• /
• 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
• /
• v.19 no.9
• /
• pp.446-453
• /
• 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.

• The Journal of Asian Finance, Economics and Business
• /
• v.7 no.10
• /
• pp.697-706
• /
• 2020

This study investigates the relationship between related loan, ownership concentration and real estate firm performance. The data was collected from 35 real estate firms listed on Indonesia Stock Exchange from 2007 to 2012. Related loans are viewed from the angle of related lending and loan. Related lending and loan is measured by the related lending on total lending ratio and related loan on total loan ratio. Firm performance is measured by the asset turnover ratio and return on assets ratio. Ownership concentration is measured by the right cash flow. The data analysis was done with regression analysis and panel data. The results of the study found that related loans had a positive effect on sales but had no effect on profits. This supports the efficient transaction hypothesis. On the other hand, related lending has a positive effect on profits that supports opportunistic transactions. Ownership concentration moderates the effect of related loan on company's performance. The related lending are beneficial for mutually supporting activities in the real estate sector business group in Indonesia, but related loans have the potential to be used in tunneling activities. The paper contributes to the related party transaction in benefits-risks of related lending and related loan in uncertainty context.

• Journal of Distribution Science
• /
• v.15 no.4
• /
• pp.5-13
• /
• 2017

Purpose - This research analyzes the effects of Korean family ownership characteristics on firm value. The positive and negative effects of family ownership on Korean firm value were analyzed. If negative effects are evident, this research explores the factors that cause a decrease in firm value. Research design, data, and methodology - The study examined a total of 5,743 companies listed on the Korea Exchange from the period 2002 to 2012 using a panel data regression analysis. Result - An empirical analysis suggests that Korean family ownership diminishes firm value. Korean family firm value has been reduced when controlling shareholders are participated in management and pursue excessive wages, or make the management entrenchment effects associated with ownership-control disparity. When the controlling shareholders of family firms have increasing control rights over the shareholders' general meeting and the directors' board, the agency costs associated with seeking increasing executive wages or private benefits reduce firm value. Conclusions - This study has significance because it reveals the negative effect of family ownership in Korea on firm value. These negative effects can be the result of agency problems from controlling family shareholders seeking excessive wages or ownership-control disparity.

• Journal of the Korea Institute of Information Security & Cryptology
• /
• v.28 no.6
• /
• pp.1607-1621
• /
• 2018

The financial industry, which guarantees a credible transaction and can not permit forgery of its transaction information, has hitherto adhered to a traditional centralized ledger management method. However, the blockchain technology has a decentralization which has been regarded as unsafe for the time being, and the more reliable transaction agreement and data integrity are guaranteed The world's financial industry and the IT world is causing the wave. Nevertheless, the inherent characteristics of the blockchain, such as the irreversibility of block information within a blockchain and the sharing of blocks between blockchain participants, can not avoid conflicts with the privacy laws. The purpose of this study is to investigate the problems related to deletion and the third party supply of personal information by focusing on these characteristics of the blockchain and to suggest the technical alternatives of the applicable blockchain and the improvement direction of the personal information protection law for using of blockchain technology.

• Journal of Arbitration Studies
• /
• v.14 no.2
• /
• pp.173-198
• /
• 2004

Recently in Korea, franchise system has been specially used in the distribution industry. However, it also brought up many problems caused by various issues between franchisor and franchisee. The purpose of this article is to review recent trend of the franchise transaction contracts and resolution of the disputes in Korea. And to expand to use of ADR(Alternative Dispute Resolution) system as a practical dispute settlement procedure including mediation and arbitration. Arbitration means a procedure to settle any dispute in private laws, not by the adjudication of a court, but by the award of an arbitrator or arbitrators, as agreed by the parties. Arbitration agreement is a prerequisite for either party to a dispute to commence arbitral proceeding and may be in the form of a separate agreement or in the form of an arbitration clause in a contract and shall be in writing.

• Proceedings of the Society of Korea Industrial and System Engineering Conference
• /
• 2002.05a
• /
• pp.151-161
• /
• 2002

This paper presents the business model and system functionalities of a B2B e-marketplace solution that not only can overcome some problems of the public e- marketplace, but also can be applicable to both public and private types of e-marketplaces. This solution is different from the most of the public e-marketplace solutions that their main sources of revenue are transaction commissions or transaction fees through the third-party intermediation. Instead, this solution provides an ASP (Application Service Provider) functionality for direct, dis-intermediated purchasing and sales-related transactions between suppliers and buyers. With this functionality, suppliers and buyers electronically commerce with each other without the disclosure of their transactions as well as transaction commissions.

• Journal of Korean Society of Industrial and Systems Engineering
• /
• v.26 no.1
• /
• pp.30-39
• /
• 2003

This paper presents the business model and system functionalities of a B2B e-marketplace solution that not only can overcome some problems of the public e-marketplace, but also can be applicable to both public and private types of e-marketplaces. This solution is different from the most of the public e-marketplace solutions that their main sources of revenue are transaction commissions or transaction fees through the third-party intermediation. Instead, this solution provides an ASP (Application Service Provider) functionality for direct, disintermediated purchasing and sales-related transactions between suppliers and buyers. With this functionality, suppliers and buyers electronically commerce with each other without the disclosure of their transactions as well as transaction commissions.