• The Journal of Industrial Distribution & Business
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• v.11 no.1
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• pp.39-47
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• 2020

Purpose: This study investigated the effects of valuation errors on the capital market through the earnings forecasting errors of financial analysts. As a follow-up to Jensen (2005)'s study, which argued of agency cost of overvaluation, it was intended to analyze the effect of valuation errors on the earnings forecasting behavior of financial analysts. We hypothesized that if the manager tried to explain to the market that their firms are overvalued, the analysts' earnings forecasting errors would decrease. Research design, data and methodology: To this end, the analysis period was set from 2011 to 2018 of KOSPI and KOSDAQ-listed markets. For overvaluation, the study methodology of Rhodes-Kropf, Robinson, and Viswanathan (2005) was measured. The earnings forecasting errors of the financial analyst was measured by the accuracy and bias. Results: Empirical analysis shows that the accuracy and bias of analysts' forecasting errors decrease as overvaluation increase. Second, the negative relationship showed no difference, depending on the size of the auditor. Third, the results have not changed sensitively according to the listed market. Conclusions: Our results indicated that the valuation error lowered the financial analyst earnings forecasting errors. Considering that the greater overvaluation, the higher the compensation and reputation of the manager, it can be interpreted that an active explanation of the market can promote the accuracy of the financial analyst's earnings forecasts. This study has the following contributions when compared to prior research. First, the impact of valuation errors on the capital market was analyzed for the domestic capital market. Second, while there has been no research between valuation error and earnings forecasting by financial analysts, the results of the study suggested that valuation errors reduce financial analyst's earnings forecasting errors. Third, valuation error induced lower the earnings forecasting error of the financial analyst. The greater the valuation error, the greater the management's effort to explain the market more actively. Considering that the greater the error in valuation, the higher the compensation and reputation of the manager, it can be interpreted that an active explanation of the market can promote the accuracy of the financial analyst's earnings forecasts.

• Journal of Distribution Science
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• v.18 no.2
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• pp.99-108
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• 2020

Purpose: This paper investigated the relationship between market competition and firm valuation error. Furthermore, Additional analyses were made according to the quality of financial reports and the listed market. Through the process we confirm to the impact of competition on the capital market. The purpose of this study is to analyze the impact of competition on valuation errors. The preceding studies did not provide a consistent results of the effects of competing functions on the capital market. One view is that the competition could mitigate the information asymmetry, and the other is that monopolistic lessens the manager's involvement in financial reporting. This study is intended to expand the prior study by analyzing the impact of competition on the capital market and on the valuation of investors. Research design, data, and methodology: The analysis was conducted on 12,031 samples over 11 years from 2008 to 2018 using data from market in Korea. Here the valuation error was measured by the research methodology of Rhodes-Kropf, Robinson and Viswanathan (2005), and competition measured by Herfindahl-Hirschman Index multiplied by (-1), and Concentration Ratio by (-1). Results: We confirm that the positive relationship between competition and the valuation error. In addition, we also found that the positive relation between competition and valuation error was in cases of low discretionary accruals and the KOSDAQ market. This means that the net function of competition does not mitigate valuation errors. Conclusions. This study has the following contributions when compared to prior research. First, the relevance between the level of competition and the valuation of the entity was confirmed. The study by Haw, Hu and Lee (2015) suggested that monopolistic industry of analysts' forecast is more accurate due to lower the variability in earnings. This study magnified it to confirm that monopolistic lessen information uncertainty in valuation. Second, the study on valuation errors was expanded. While the study on the effect of valuation errors on the capital market is generally relatively active, it is different that competition degree has analyzed the effect on valuation errors amid the lack of research on the effect on valuation errors.

• Asia-Pacific Journal of Business
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• v.15 no.3
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• pp.287-307
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• 2024

Purpose - This study was a study on managerial overconfidence and valuation errors to verify how the increase in managerial overconfidence affects valuation errors. Design/methodology/approach - Managerial overconfidence propensity refers to managers having excessive confidence in their position or ability (Hayward and Hambrick, 1997; Park Jin-hee, 2021) and was measured according to Schrand and Zechman (2012). Valuation error refers to a situation where a company's actual stock price differs from its intrinsic value as a result of numerous information asymmetries in the market, and was measured using the measurement method in Rhodes-Kropf et al (2005) study. The sample of this study used companies listed in the capital market for a total of 12 years from 2011 to 2022. Findings - As a result of the verification, there was a significant positive (+) relationship between managerial overconfidence and valuation errors, and this relationship was alleviated as the percentage of foreign shareholders shares or the number of financial analysts they followed increased. It can be interpreted that when the information demands of investors, such as foreign shareholders and financial analysts, increase significantly, managers provide more information to meet investors demands, thereby reducing information asymmetry and leading to a decrease in valuation errors.. Research implications or Originality - Previous studies on overconfidence, among the cognitive characteristics of individual managers, have yielded mixed results. In this study, we conducted a direct empirical analysis of managerial overconfidence using a measure called valuation error, which evaluates numerous information asymmetries in the capital market. This is expected to help stakeholders in the capital market understand the characteristics of managers and recognize their importance. It can also be used as a basis for establishing policies to reduce valuation errors.

• Journal of Korea Technology Innovation Society
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• v.3 no.2
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• pp.1-13
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• 2000

This paper maps the overall features of technology valuation through a conceptional framework. The framework is composed of 4 dimensions such as basic, compositional, technical and behavioral dimension. At basic dimension, what is value and what is technology are discussed. The valuation of technology or the valuation of other assets are compared at the compositional dimension. The techniques of the valuation of technology and its difference with the valuation methods of other assets are examined at the technical dimension. The effectiveness, possibility and error of valuation are discussed at the behavioral dimension.

• The Journal of Asian Finance, Economics and Business
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• v.6 no.4
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• pp.83-90
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• 2019

The purpose of this study is to test the effect of business strategy on valuation error. Business strategy includes managerial decision making and managerial tendency. In previous research, there is a negative relationship between business strategy and accounting quality. In this study, we try to confirm whether strategy tendencies affected valuation errors. In order to confirm empirically between business strategy and overvaluation, we use 8,117 firms that between 2006 and 2017 and listed in KSE and KOSDAQ. We calculated business strategy which is introduced by Bentley, Omer, and Sharp (2013). We also used the overvaluation method introduced in Rhodes-Kropf, Robinson, and Viswanathan (2005). The results show that the more the leading business strategy is, the greater the value error becomes. In the case of dividing into leading and defensive companies, the lead firms showed a significant positive correlation with the valuation errors, while the defensive firms showed the negative relationship with overvaluation. This study examined the business strategy and the overvaluation. we confirmed whether the management strategy deepens the evaluation error caused by the firm characteristics. The results are meaningful that we extended the study on the quality of financial reporting of leading strategic firms.

• Journal of Distribution Science
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• v.18 no.5
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• pp.5-13
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• 2020

Purpose: The aim of this article is to test the link between growth of loan distribution and Bank Valuation in Vietnam's banking sector. At the same time, the study also compared the differences in the effect of growth of loan to valuation bank in banks of different sizes, ownership rates and bank values. Research design, data and methodology: With panel data estimation techniques along with robust standard error for a sample of the banks listed on Vietnam stock exchange from 2012 to 2019. Results: Growth of loan has a positive impact on Bank Valuation (by Tobin's Q). A closer investigation provides evidence for the differential valuation effect of loan growth depending on different features of banks. Specifically, loan growth is found positively and significantly associated with Bank Valuation in small and non-state-owned banks only. Besides, bank size, deposit, and return on equity are found negatively associated with Tobin's Q, while loan loss provisions exhibit a positive relation with this measure of Bank Valuation. Conclusions: These findings provide contributions to the literature on the existence of the effect of loan growth on Bank Valuation. At the same time, the study also provides practical implications for policy makers in banks and investors.

• Journal of Korea Game Society
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• v.14 no.4
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• pp.67-74
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• 2014

Real options valuation models are now proved as a effective valuation method both in Theoretically and empirically. However, to use real options model for early stage start-ups, additional non-financial information is crucial in the valuation process. Previous studies theoretically suggested the modified real options valuation model and process to use non-financial information in the valuation of early stage startups, but there is no empirical evidence on the suggested model. Therefore, this study investigated the effectiveness of the modified real options valuation model using a case study. The case study result showed that the modified real options valuation effectively reflect the non-financial information in early stage startups, and decrease the forecasting error in the valuation process.

• Journal of Software Assessment and Valuation
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• v.15 no.2
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• pp.95-100
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• 2019

In this paper, we propose a simple hardware reporting method for errors in soft-RAID systems of Linux OS. Compared with other reporting methods, the proposed method displays error status intuitively without any additional access process such as log-in process or home-page access. In particular, the server actively displays the error status, so the administrator can take immediate action. In order to confirm the effectiveness of the proposed method, the experimental circuit was constructed and the experimental results showed that the error was actively displayed when an error occurred in the storage device. As such, a soft-RAID system can perform almost the same function as a hardware RAID system, thereby ensuring server data reliability at low cost.

• Journal of Software Assessment and Valuation
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• v.16 no.2
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• pp.69-76
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• 2020

In this paper, the problem of determining the optimal time to market of software was studied using error correction time, an indicator of error correction difficulty. In particular, it was intended to modify the assumption that error detection time and correction time are independent in the software reliability growth model considering the existing error correction time, and to establish a general framework model that expresses the correlation between error detection time and correction time to determine when the software will be released. The results showed that it was important from an economic perspective to detect errors that took time to correct early in the test. It was concluded that it was very important to analyze the correlation between error detection time and error correction time in determining when to release the optimal software.

• Journal of the Korea Safety Management & Science
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• v.6 no.2
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• pp.1-9
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• 2004

The chemical factory deals with dangerous element and more advance, human-error analyzes and becomes effective research for the country and region. This paper analysis the form of work-miss on human-error according to a safety accident for domestic chemical factory from 1999-2002. It include the present contents and raise issues human knowledge, behavior, judgment, sensibility as an important counter plan that makes the safety solution of work miss. For the point of view of human knowledge, it takes color standard for works to be effective in work place. For behavior, the test has been for risk Point of work place and infra worker movement, also the workers performed professional work as classify according to work. For judgement, the valuation sheet is reflected to minimize the human-error and the 3rd supervisor does a cross-check audit beforehand. For sensibility, it is applicable for human relations, information, communication by program to the consciousness and an attitude of worker-supervisor.