Search results

The purpose of this paper is to provide a survey of recent studies on Korean firms’ financial policies and their interactions with financial markets, and suggest directions for future research.

The authors review the finance research on Korean firms and markets, focusing on the articles published in the last 20 years.

This survey of the recent Korean finance literature covers the research on the capital structure and the distinct financing behaviors of chaebol-affiliated firms and independent firms; the factors affecting the costs of capital and firms’ preferences for capital budgeting methods; raising capital through public and private equity issuance; corporate governance and the market for corporate control; payout policies; and bank-firm relationship. The authors suggest a number of future research directions that may lead to significant contributions to the literature.

This paper provides the first comprehensive review of the post-crisis corporate finance literature in Korea.

The authors present the results of a survey on how Korean firms evaluate new projects and estimate their capital costs. The authors report how Korean firms’ capital budgeting practices compare to other developed countries and to best practices in the field of finance.

The authors survey CFOs of major Korean firms on their capital budgeting practices. The authors then compare the results against the US and European firms and best practices of leading firms and financial advisors.

The authors find that the capital budgeting practices of Korean firms are as strong as or stronger than firms in developed markets. A majority of Korean firms use best practices techniques such as NPV, IRR and the CAPM for project evaluation and cost of equity estimation. Chaebol affiliation results in somewhat stronger capital budgeting practices. The authors also find that other factors, such as company size, leverage, CEO age and CEO education, impact capital budgeting practices.

This paper is the first article that comprehensively examines Korean firms' capital budgeting practices.

The authors investigate how the stock market reacts to financial restatements using the restatements data from the United States Government Accountability Office (GAO-06-678). In particular, the purpose of this paper is to examine the long-run equity performance of the restating firms, for holding periods of one to five years after the announcements of restatements.

This paper measures the long-run stock performance of restating firms with the buy-and-hold abnormal returns and time-series regression analyses based on Fama–French’s (1993) three-factor model and Carhart’s (1997) four-factor model.

The authors find that restating firms significantly underperform in the long run compared with their peers matched by industry, size and book-to-market. Restating firms’ underperformance is confirmed with time-series regression analyses based on Fama–French’s (1993) three-factor model and Carhart’s (1997) four-factor model. Further, the authors find the negative long-run abnormal performance of restating firms is primarily driven by large firms. The authors also report that self-prompted restatements and improper revenue accounting-triggered restatements result in worse long-run abnormal performance.

This paper is the first paper that thoroughly investigates the long-run stock returns of the firms that restate financial statements by fully considering the size effect.

The purpose of this paper is to contribute to financial managers’ capital budgeting decision-making processes by proposing a new paradigm of capital investment appraisal. The expected return, required return structure of the proposed purchasing power return (PPR) methodology eliminates the many flaws associated with the competing internal rate of return (IRR) and modified IRR (MIRR) techniques.

The authors provide a new framework for examining long-term investment projects through a percentage return prism. Unlike that of IRR and MIRR, mathematical consistency with net present value (NPV) is a design requirement.

PPR eliminates the many flaws found in the IRR and MIRR methodologies, is mathematically consistent with NPV, and identifies positive-NPV investments forecasted to reduce the company’s purchasing power. These projects are acceptable under NPV, but flagged for additional review and potential rejection. Created to examine projects on a percentage return basis, PPR employs market-based inflation rates to convert all cash flows into constant purchasing power units of measure. From these units, an expected real return is estimated and compared to the project’s inflation-adjusted required return, resulting in an accept/reject decision consistent with that of NPV.

The proposed PPR is a new paradigm of capital investment appraisal that eliminates the many problems found in the IRR and MIRR techniques, is mathematically consistent with the NPV method, and helps financial decision makers examine investment projects on an expected percentage return basis. PPR also flags for further review projects expected to actually reduce the company’s purchasing power.

This paper aims to contribute to the existing finance literature on capital structure by examining the long‐run equity performance of the firms that employ extremely conservative debt policy – zero leverage for three or five consecutive years.

This paper measures the long‐run equity performance of zero‐debt firms with two commonly used methods: the buy‐and‐hold abnormal returns following Barber and Lyon, and the Fama and French three‐factor models. The four‐factor models are also used to check the robustness of the result.

The authors find that zero‐debt firms perform better over the long run based on the calendar‐time portfolio regressions after adjusting for Fama‐French factors. The results indicate that the persistent lack of debt in the capital structure seems an important determinant of stock returns, and the impact of extreme conservatism in debt policy is not fully captured by the theoretical and empirical risk proxies, such as beta, size, book‐to‐market, and momentum.

The benefit of the present article for investors and portfolio managers is the identification of an additional important determinant of stock returns.

This paper is the first article that thoroughly investigates the long‐run stock returns of the firms that choose to stay debt free over an extended period of time.

We examine three corporate governance characteristics of preferred stock issuers relative to non-issuers: managerial equity ownership, board size, and block shareholder ownership. We find that the preferred issuers have significantly lower managerial equity ownership than their controls. The finding is consistent with our expectation that the use of preferred stock and managerial equity ownership both serve to reduce agency costs and thus, preferred issuers tend to have little incentive to resort to higher managerial ownership to lessen agency costs. Significantly larger board size for preferred issuers is evident, but we find no difference in block shareholder ownership.

The purpose of this paper is to identify the antecedent factors – perceived usefulness (PU), perceived switching cost (PSC) and perceived web security (PWS) – affecting learners’ attitude toward online lecture website (ATW), which, in turn, affects electronic word of mouth (eWOM) and finds the factor that online lecture business should focus on the most to make learners have positive attitude.

This paper investigates the functional relationship among those five constructs; and examines the moderating role of personal interactivity. Data were collected from learners who had taken online lectures and were using social network sites, and a research model was analyzed using structural equation modeling.

The results show that PU and PSC positively influence ATW but PWS has no significant influence on ATW; PU is the most influential factor to ATW; ATW positively influences eWOM; personal interactivity has a moderating effect on some paths; and path coefficients are higher in the high-interactivity group than the low-interactivity group for all the links except the link from PU to ATW.

This paper contributes to online lecture business by understanding learners’ perception and behavior to the websites. Unlike many previous studies, this study designates eWOM as dependent variable and personal interactivity as moderation variable. This study shows interesting results occurred between low- and high-interactivity groups.