Vertical Integration,Firms’ Entry,Exit, Strategic Shifts,Age, and The Productivity Growth in Korea's Core Growth‐Leading Industries

This study attempts to measure the impact of firms’ entry, exit, strategic shifts, and age on the productivity growth of Korea's three core growth‐leading industries and their vertical integration with capital share (VI) firms and non‐VI (NVI) firms in view of the 2008 global financial crisis and the institutional push by the Korean Government. A stochastic frontier production model was applied to firm‐level panel data from 2006 to 2011 for Korea's automobile, electronics and general machinery industries. The results show that exogenous shocks to the market triggered large‐scale resource reallocations from firms with declining productivity to firms with less declining or rising productivity, and market share reallocation between VI firms and NVI firms. The Korean Government's institutional push led the productivity growth of NVI firms to reach their highest levels in 2010. In a VI structure, a structure comprising VI firms only, the agency problem dominated the synergies of secure supply chains and saving on transaction costs, while NVI firms endeavoured to raise their productivity to step into a VI structure to secure stable supply chains, only to find their R&D initiatives stagnated once they took on the VI structure. Therefore, efficient resource reallocation is hindered by the agency problem within the bounds of vertically integrated industrial structures.     

When and Why Do Takeovers Lead to Fraud?

This paper develops a model explaining how acquisitions of controlling block ownership can facilitate post‐takeover fraud by new managers when investor protection is poor. Based on disclosures of embezzlement or breach of fiduciary duty in Korean firms, we find that the probability of explicit looting in takeover targets is 13%, almost five times as large as a matched sample of non‐targets. Post‐takeover frauds are primarily driven by transfers of minority blocks, while the corresponding probability in majority acquisitions is statistically indistinguishable from the non‐targets. These findings may explain why minority acquisitions of controlling blocks are popular under poor investor protection.     

Determinants of organizational performance: some implications for top executive leadership in Korean firms

ABSTRACT

Leadership, although commonly assumed to be greatly significant, is not typically studied in terms of structural characteristics accounted for in organizational performance. The effect of top executive leadership is explored here as a key factor that reflects organizational characteristics by offering a new framework and presenting an empirical test of Korean business firms. This research can be possibly made by focusing on the size of the leadership which explicates the difference between structural, resource and contextual variables in organizations. The multivariate regression analysis shows that firm size, leadership, debt and export significantly affect organizational performance, as measured by net income. The mechanism of Korean business firms needs to readjust to the new environment for organizational performance.     

Anchored putter ban: An examination of whether anchored putting impacts career success and putting performance

The Professional Golfers' Association (PGA) Tour ban on anchored putting (Rule 14‐1b) took effect on January 1, 2016. The ban remains controversial because the governance decision appears to have been made without adequate empirical evidence. Accordingly, to investigate the efficacy of the ban, the impact of using anchored putters on PGA golfers' career success and putting performance was examined. PGA golfers ranked in the top 125 were studied from 2009 to 2015. The analysis revealed an anchored putter offered no unfair advantage with regard to improving players' career success or putting performance when compared with standard putter usage by PGA golfers.     

Examining the influencing factors of intention to share accommodations in online hospitality exchange networks

ABSTRACT

CouchSurfing is a free social-network-based online hospitality exchange network, aptly representing a new sharing economy phenomenon. Based on social capital theory and previous literature, this study attempts to answer why hosts help strangers without any expected economic benefit within online hospitality exchange networks. An empirical study based on a Web survey conducted with CouchSurfing hosts reveals that the most identified antecedents (enjoy helping, shared narratives, desire to make friends, and reciprocity) are significantly related to hosts’ intention to share accommodations. Interestingly, the overshadowing effect of trust in CouchSurfing on the intention to share accommodations is also found.     

Auditors' Responses to Workload Imbalance and the Impact on Audit Quality*

Using detailed data for fieldwork hours and audit hours by rank from audit engagements in Korea, we examine whether audits conducted under workload imbalance, proxied by busy‐season audits, impair audit quality, and how auditors adjust staff assignments for busy‐season audits. We generally find that busy‐season audits are associated with lower audit quality, and that audit firms reduce the involvement of senior auditors during busy‐season audits. In addition, the greater the involvement of senior auditors and junior auditors, the lesser the deterioration in audit quality. Finally, although there is no increase in interim audits in response to workload imbalance during busy seasons, increasing interim audits can mitigate the negative impact of busy‐season audits on audit quality. Our results are relevant to auditors and regulators, who have expressed concerns about the adverse effects of workload imbalance on audit quality.     

Does an Audit Judgment Rule Increase or Decrease Auditors' Use of Innovative Audit Procedures?

The current audit environment encourages auditors to conduct defensive auditing procedures in lieu of using new, innovative, and potentially more effective audit procedures, due to concerns these procedures may be second-guessed in litigation or by audit inspectors such as the PCAOB. As a result, auditors may prefer traditional “generally accepted” procedures over innovative procedures that are potentially more effective. We test recent proposals that an Audit Judgment Rule (AJR) encourages the use of innovative, and potentially more effective, audit procedures analogous to the similar Business Judgment Rule that affords legal protections to corporate directors. Under an AJR, litigators or audit inspectors could not second-guess auditor judgments, even if they perceive that alternate judgments would have ordinarily been reached, provided the auditor's judgment was made in good faith and in a rigorous manner. However, the AJR's requirements that auditors must defend the rigor of their innovative judgments could potentially backfire and lead auditors to select more traditional procedures. Under the framework of goal activation theory, we conduct an experiment with audit managers and seniors and find that an AJR makes auditors less likely to select innovative audit procedures, particularly when audit risk is high. They do so despite believing the innovative procedures to be more effective than the traditional procedures. Findings from a supplementary experiment with experienced auditors further suggest that national office affirmation of the reasonableness of the procedures does not help overcome this effect. Overall, our findings suggest that an AJR may have the unintended consequence of further increasing auditors' focus on more traditional, and potentially less effective, audit procedures.     

Personalized goal-based investing via multi-stage stochastic goal programming

In this paper, we propose a goal-based investment model that is suitable for personalized wealth management. The model only requires a few intuitive inputs such as size of wealth, investment amount, and consumption goals from individual investors. In particular, a priority level can be assigned to each consumption goal and the model provides a holistic solution based on a sequential approach starting with the highest priority. This allows strict prioritization by maximizing the probability of achieving higher priority goals that are not affected by goals with lower priorities. Furthermore, the proposed model is formulated as a linear program that efficiently finds the optimal financial plan. With its simplicity, flexibility, and computational efficiency, the proposed goal-based investment model provides a new framework for automated investment management services.     

Evidence of a glass ceiling for arts and culture professionals in Korea

Using the five available waves of the Wage Structure Survey data, this study employs quantile decomposition to investigate the existence of a glass ceiling among Korean professionals. The decomposition results for all professional workers show an inverse U-shape, which implies no evidence of a glass ceiling. However, we find a monotonically increasing pattern for arts and culture professionals, indicating strong evidence of a glass ceiling on their labour market. This result implies that, as the wage quantile moves from lower to higher levels, female professionals in arts and culture jobs face significant barriers to career advancement. This analysis supports the recent assertion of UNESCO that gender equality in culture is not immune to inequalities and discrimination.     

Assessment of the environmental sustainability of restaurants in the U.S.: The effects of restaurant characteristics on environmental sustainability performance

ABSTRACT

This paper investigated the current levels of environmental sustainability in restaurants across the U.S. to determine whether a restaurant’s proclivity for environmental sustainability depended on its characteristics such as chain affiliation or restaurant type.

A web-based survey was administered to 2,500 top-level restaurant managers, from which a total of 218 responses were judged as usable. The data were analyzed using independent

sample t-tests and ANOVA. This study presents an in-depth account of the environmental sustainability in restaurants across the U.S. based on an evaluation of top-level managers. This study also highlights the differences in restaurant environmental sustainability across different restaurant segments.