• Asia Marketing Journal
• /
• v.15 no.3
• /
• pp.53-77
• /
• 2013

As advertising and promotions are categorized as operating expenses, managers tend to reduce marketing budget to improve their short term profitability. Gauging the value and accountability of marketing spending is therefore considered as a major research priority in marketing. To respond this call, recent studies have documented that financial market reacts positively to a firm's marketing activity or marketing related outcomes such as brand equity and customer satisfaction. However, prior studies focus on the relation of marketing variable and financial market variables. This study suggests a channel about how marketing activity increases firm valuation. Specifically, we propose that a firm's marketing activity increases the level of the firm's product market information and thereby the dispersion in financial analysts' earnings forecasts decreases. With less uncertainty about the firm's future prospect, the firm's managers and shareholders have less information asymmetry, which reduces the firm's cost of capital and thereby increases the valuation of the firm. To our knowledge, this is the first paper to examine how informational benefits can mediate the effect of marketing activity on firm value. To test whether marketing activity contributes to increase in firm value by mitigating information asymmetry, this study employs a longitudinal data which contains 12,824 firm-year observations with 2,337 distinct firms from 1981 to 2006. Firm value is measured by Tobin's Q and one-year-ahead buy-and-hold abnormal return (BHAR). Following prior literature, dispersion in analysts' earnings forecasts is used as a proxy for the information gap between management and shareholders. For model specification, to identify mediating effect, the three-step regression approach is adopted. All models are estimated using Markov chain Monte Carlo (MCMC) methods to test the statistical significance of the mediating effect. The analysis shows that marketing intensity has a significant negative relationship with dispersion in analysts' earnings forecasts. After including the mediator variable about analyst dispersion, the effect of marketing intensity on firm value drops from 1.199 (p < .01) to 1.130 (p < .01) in Tobin's Q model and the same effect drops from .192 (p < .01) to .188 (p < .01) in BHAR model. The results suggest that analysts' forecast dispersion partially accounts for the positive effect of marketing on firm valuation. Additionally, the same analysis was conducted with an alternative dependent variable (forecast accuracy) and a marketing metric (advertising intensity). The analysis supports the robustness of the main results. In sum, the results provide empirical evidence that marketing activity can increase shareholder value by mitigating problem of information asymmetry in the capital market. The findings have important implications for managers. First, managers should be cognizant of the role of marketing activity in providing information to the financial market as well as to the consumer market. Thus, managers should take into account investors' reaction when they design marketing communication messages for reducing the cost of capital. Second, this study shows a channel on how marketing creates shareholder value and highlights the accountability of marketing. In addition to the direct impact of marketing on firm value, an indirect channel by reducing information asymmetry should be considered. Potentially, marketing managers can justify their spending from the perspective of increasing long-term shareholder value.

• Journal of Intelligence and Information Systems
• /
• v.18 no.4
• /
• pp.59-77
• /
• 2012

This study focuses on predicting which firms will increase capital by issuing new stocks in the near future. Many stakeholders, including banks, credit rating agencies and investors, performs a variety of analyses for firms' growth, profitability, stability, activity, productivity, etc., and regularly report the firms' financial analysis indices. In the paper, we develop predictive models for rights issues using these financial analysis indices and data mining techniques. This study approaches to building the predictive models from the perspective of two different analyses. The first is the analysis period. We divide the analysis period into before and after the IMF financial crisis, and examine whether there is the difference between the two periods. The second is the prediction time. In order to predict when firms increase capital by issuing new stocks, the prediction time is categorized as one year, two years and three years later. Therefore Total six prediction models are developed and analyzed. In this paper, we employ the decision tree technique to build the prediction models for rights issues. The decision tree is the most widely used prediction method which builds decision trees to label or categorize cases into a set of known classes. In contrast to neural networks, logistic regression and SVM, decision tree techniques are well suited for high-dimensional applications and have strong explanation capabilities. There are well-known decision tree induction algorithms such as CHAID, CART, QUEST, C5.0, etc. Among them, we use C5.0 algorithm which is the most recently developed algorithm and yields performance better than other algorithms. We obtained data for the rights issue and financial analysis from TS2000 of Korea Listed Companies Association. A record of financial analysis data is consisted of 89 variables which include 9 growth indices, 30 profitability indices, 23 stability indices, 6 activity indices and 8 productivity indices. For the model building and test, we used 10,925 financial analysis data of total 658 listed firms. PASW Modeler 13 was used to build C5.0 decision trees for the six prediction models. Total 84 variables among financial analysis data are selected as the input variables of each model, and the rights issue status (issued or not issued) is defined as the output variable. To develop prediction models using C5.0 node (Node Options: Output type = Rule set, Use boosting = false, Cross-validate = false, Mode = Simple, Favor = Generality), we used 60% of data for model building and 40% of data for model test. The results of experimental analysis show that the prediction accuracies of data after the IMF financial crisis (59.04% to 60.43%) are about 10 percent higher than ones before IMF financial crisis (68.78% to 71.41%). These results indicate that since the IMF financial crisis, the reliability of financial analysis indices has increased and the firm intention of rights issue has been more obvious. The experiment results also show that the stability-related indices have a major impact on conducting rights issue in the case of short-term prediction. On the other hand, the long-term prediction of conducting rights issue is affected by financial analysis indices on profitability, stability, activity and productivity. All the prediction models include the industry code as one of significant variables. This means that companies in different types of industries show their different types of patterns for rights issue. We conclude that it is desirable for stakeholders to take into account stability-related indices and more various financial analysis indices for short-term prediction and long-term prediction, respectively. The current study has several limitations. First, we need to compare the differences in accuracy by using different data mining techniques such as neural networks, logistic regression and SVM. Second, we are required to develop and to evaluate new prediction models including variables which research in the theory of capital structure has mentioned about the relevance to rights issue.

• Asia Marketing Journal
• /
• v.13 no.4
• /
• pp.227-251
• /
• 2012

This study analyzed Woori Investment and Securities' industry-leading marketing from both a brand management and a marketing decision-making perspective. By executing a different marketing strategy from its competitors, Woori Investment and Securities recognized recent changes in the asset management and investment markets as an open opportunity, and quickly responded to the market changes. First, the company launched the octo brand as a multi-account product, two years before its competitors offered their own products. In particular, it created a differentiated brand image, using the blue octopus character, which became familiar to the general financial community, and was consistently employed as part of an integrated marketing communications strategy. Second, it executed a brand expansion strategy by sub-branding octo in a variety of new financial products, responding to rapid changes in the domestic financial and asset management markets. Through this strategic evolution, the octo brand became a successful wealth management brand and representative of Woori Investment & Securities. Third, it has converged market research, demand and trend analysis, and customer needs acquired through various customer contact channels into a marketing perspective. Thus, marketing has participated in the product development stage, a rarity in the finance industry. Woori Investment and Securities has a leading marketing system. The heart of the successful product creation lies in a collaboration of their customer bases among the finance companies in the Woori Financial Group. The present study suggested a corresponding strategy for octo brand, which is expected to enter into the maturity stage of its product life cycle. In addition, this study found a need to modify the current positioning strategy in order to position and preserve sustainability in the increasingly competitive asset management market. It also suggested the need for an offensive strategy to counter the number one M/S company, and address the issue of cannibalism in the Woori Financial Group.

• Korean System Dynamics Review
• /
• v.15 no.2
• /
• pp.97-131
• /
• 2014

The purpose of this study is to analyze Foreign Exchange(FX) exposure and FX hedge strategy based on the systems thinking perspective using causal loop diagrams. FX exposure has been a critical issue on a business management. Many studies in Korea have researches on variables which make effects to the company value. This study displays causal loop diagrams(CLDs) on these issues. In order to make CLD more objective, most causalities are articulated from recent 72 studies (1998~2013) of domestic top journals. This approach is valuable in that it is the first try to draw all the causalities from various literature review regarding FX exposure and FX hedge strategy. This study is expected to make a useful and basic material to research the financial issues of corporate, as the first research to dynamically understand FX exposure and FX hedge strategy.

• Journal of Information Technology Services
• /
• v.12 no.1
• /
• pp.189-199
• /
• 2013

As many organizations have adopted and implemented ERP systems, concerns about ERP performance also have increased. Former researches studied the ERP implementation of general large or medium size enterprises but there are not enough studies on ERP systems of a specific industry domain. In this paper, we introduce a case study on ERP adoption methodology of global leading company 'D' in shipbuilding and marine engineering industry. We examined ERP implementation background, method and scope and evaluated ERP performance in perspective of both quantitative and qualitative approaches. Quantitative research usually examines ERP performance based on financial statements and qualitative study typically examines organization change or improvement. As a result, ERP implementation in shipbuilding and marine industry can improve quantitative aspects such as cost, human resource and organization performance. As qualitative analysis, business process and tools can be unified and management transparency can be improved by ERP implementation. The result of this paper will be useful guideline for organizations which are considering ERP systems.

• Korean Journal of Health Education and Promotion
• /
• v.15 no.2
• /
• pp.217-233
• /
• 1998

This paper analyzed four different perspectives on health care reform in Korea in terms of the basic values, formulated problems and reform plans, implementation methods, and supporting groups. The medical security plan was insisted by social security specialists and social activists focusing on the integration of medical insurance coops in order to enhancing equity and right of the people. However, its perspective was limited to promoting security instead of reforming health care system. The government proposed the health care reform plans in 1994 and in 1997, focusing on promoting efficiency by remedying many problems in health care delivery system. However, its implementation was not successful due to the lack of organizational and financial supporters. Recently, two opposite proposals were issued. The market reform plan paid attention to revitalizing the market function to promoting efficiency by allowing hospitals to treat private patients instead of applying the medical insurance regulation. The government reform plan focused on intensifying governmental planning and intervention in the health care sector in order to removing inefficiency and promoting equity with the supports of social activists and labor unions. Finally, this paper proposed an alternative plan to promote harmonious social relationship between actors in the health care system.

• Management Science and Financial Engineering
• /
• v.16 no.2
• /
• pp.99-114
• /
• 2010

The influencing factors of large-scale IT investment decisions are rarely investigated in an empirical perspective. We find out different behaviors in IT investment decisions according to the size of organization. Large scale IT-investment decisions (e.g. system downsizing) can be the outcome of decision-makers' motivation to adopt and control new IT systems- However, this phenomenon is salient in the large-sized organization rather than small-sized ones. Based on our investigation, we predict general IT decision-making behaviors in organizations when making IT investment decisions.

• Journal of Electrical Engineering and Technology
• /
• v.13 no.6
• /
• pp.2203-2211
• /
• 2018

Capacity payment mechanism has been adopted as the incentive scheme to achieve resource adequacy in Korean electricity market, however, the level of capacity price has been controversial due to its insufficient extent to incur financial loss for certain generators. Therefore, a new method is proposed to estimate the proper level of capacity price incorporating profitability of market participants and resource adequacy in this paper. The proposed method is successfully applied to test system based on Korean power system.

• Proceedings of the Korean Operations and Management Science Society Conference
• /
• 2000.04a
• /
• pp.330-336
• /
• 2000

This paper discusses the potential of system dynamics modelling to support balanced scorecard. The balanced scorecard is a conceptual framework for translating an organisation's strategy into a set of performance indicators. These performance indicators are distributed across the 'classic'model's four perspective: Customers, Internal Business Processes, Financial, and Learning and Growth. This balanced scorecard, whilst having significant strength, suffers from the limitation of all performance indicator systems, namely that the interrelationships between indicators are overlooked and there is no way of taking into account the impact of delayed feedback which flows from introduction of new policy and legislative changes. System Dynamics is a methodology for understanding complex problems where there is dynamic behaviour and where feedback impacts significantly on system outcomes. System dynamics provides a rigorous basis for qualitative testing of the effects of performance indicators in complex environments such as health or social security. This can be supplemented with quantitative system dynamics simulation tools that further test the validity of indicators and the business rules implicit in them. System dynamics modelling has an important role to play in extending feedback cycle in performance measurements to a full systems approach.

• Management Science and Financial Engineering
• /
• v.13 no.2
• /
• pp.29-46
• /
• 2007

This paper makes an attempt to compare the two important methods for finding solutions of multi-item inventory problem with more than one conflicting objectives. Panda et al.[9] discusses a distance-based method to find the best possible compromise solution with variation of priority under the given weight structure. In this paper, the problem in [9] is revisited through the Pareto-optimal front of genetic algorithm with the help of a situation of retail stocking of FMCG business. The advantages of using the solutions from the perspective of the decision maker obtained through multi-objective optimization are highlighted in terms of population search, weighted goals and priority structure, cost, set of compromise solutions along with prevention of stock-out situation.