• 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.

• International Journal of Advanced Culture Technology
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• v.12 no.1
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• pp.293-298
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• 2024

The purpose of an internal control system is to prevent the occurrence of errors and fraud in the process of producing accounting information, thereby providing investors with reliable information. For the effective operation of an internal control system, it is necessary to secure a sufficient number of personnel and experienced staff. This study focuses on the personnel directly involved in producing accounting information, examining whether companies that invest in their internal control staff experience a mitigation in the phenomenon of valuation errors. The analysis revealed that the size and experience months of the personnel responsible for internal control have a significant negative relationship with valuation errors. This result implies that by securing sufficient personnel for the smooth operation of the internal control system and placing experienced staff within the system, investors can effectively make judgments about the intrinsic value based on quality accounting information, thereby reducing valuation errors.

• New & Renewable Energy
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• v.10 no.1
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• pp.41-49
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• 2014

For a proper valuation of wind power project, it is necessary to consider volatilities of key parameters such as annual energy production, electricity sales price, and long term interest rate. Real option methodology allows to calculate option values of these parameters. Volatilities to be considered in wind project valuation are 1) annual energy production (AEP) estimation due to meteorological variation and estimation errors in wind speed distribution, 2) changes in system marginal price (SMP), and 3) interest rate fluctuation of project financing which provides refinancing option to be exercised during a loan tenor for commercial scale projects. Real option valuation turns out to be more than half of the sales value based on a case study for a FIT scheme wind project that was sold to a financial investor.

• 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 the Korean Society of Environmental Restoration Technology
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• v.18 no.1
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• pp.127-133
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• 2015

Interests in ecosystem services have increased and a number of attempts to perform a quantitative valuation on them have been undertaken. To classify the ecosystem types landcover classification maps are generally used. However, some forest types on landcover classification maps have a number of errors. The purpose of this study is to verify the forest types on the landcover map by using a variety of field survey data and to suggest an improved method for forest type classifications. Forest types are compared by overlaying the landcover classification map with the 4th forest type map, and then they are verified by using National Forest Inventory, 3rd National Ecosystem Survey and field survey data. Misclassifications of forest types are found on the forest on the forest type map and farm and other grassland on the landcover map. Some errors of forest types occur at Daegu, Busan and Ulsan metropolitan cities and Gangwon province. The results of accuracy in comprehensive classification show that deciduous forest is 76.1%; coniferous forest is 54.0%; and mixed forest is 22.2%. In order to increase the classification accuracy of forest types a number of remote sensing images during various time periods should be used and the survey period of NFI and the National Forest Inventory and National Ecosystem Survey should be consistent. Also, examining areas with wide forest patch should be prioritized during the field survey in order to decrease any errors.

• Journal of the Korean Society of Manufacturing Process Engineers
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• v.9 no.1
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• pp.87-92
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• 2010

Micromachining technology using a ultra-precision micromachining system is widely applied in the fields of optics, biotechnology and analytical chemistry, etc. specially in microfabrication of fresnel lens, light guide panels of TFT-LED and PDP ribs with micro-patterns, machining errors have an effect on the performance of those products. The deflection of tool and tool holder is known to be one of the very important factors that is due to machining errors in micromachining. The deflections of diamond tool and tool holder used in micro-grooving are analysed by FEM. We analysed by FEM. With an linearity valuation of FEM, deflection of tool and tool holder is calculated by using the data of cutting force which is acquired from micro-V groove machining experiments in micromachining system.

• 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 Korean Society of Environmental Engineers
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• v.28 no.1
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• pp.74-80
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• 2006

Benefit transfer is a method, which obtains an estimate for the economic valuation of non-marketed commodities at a given site through the analysis of studies that have been previously carried out to value similar commodities at a different location. The objective of this study was to estimate benefit transfer values for the construction of the integrated sewerage system in the catchment area of dams in Korea. For pooled data analysis, five models were suggested in this study. Among five models, model 2 showed only 6 to 7% errors when the willingness-to-pay(WTP) predicted in the policy-site, Dam Soyang was compared with that estimated using contingent valuation method(CVM) in the study-sites, Dams Namgang, Hapcheon, and Daecheong. However, the WTP estimate predicted by model 1 showed the absolute errors of 42 to 47% when it was compared with WTP estimated using CVM in Dams Andong and Imha. It seemed that residents of Dams Andong and Imha have feeling of being victimized since two dams were constructed very adjacently, the upstream area was designated as drinking water source protection zone, and thereafter their developmental economical actions have been significantly restricted.

• The Journal of the Korea Contents Association
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• v.13 no.12
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• pp.369-378
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• 2013

The Korean Won-Dollar exchange markets showed radical price movements in the late 1990s and 2008. Therefore it provides good sources for studying volatility phenomena. Using the GARCH option models, I analysed how the prices of foreign exchange options react volatilities in the foreign exchange spot prices. For this I compared the explanatory power of three option models(Black and Scholes, Duan, Heston and Nandi), using the Won-Dollar OTC option markets data from 2006 to 2013. I estimated the parameters using MLE and calculated the mean square pricing errors. According to the my empirical studies, the pricing errors of Duan, Black and Scholes models are 0.1%. And the pricing errors of the Heston and Nandi model is greatest among the three models. So I would like to recommend using Duan or Black and Scholes model for hedging the foreign exchange risks. Finally, the historical average of spot volatilities is about 14%, so trading the options around 5% may lead to serious losses to sellers.