Money Market Reform in Korea and Its Effects on the Overnight Call–Repurchase Agreement Rate

The Korean government implemented money market reform after the global financial crisis, aiming to develop the repurchase agreement (RP, repo) market. In this article, I analyze the reform and its effects on money markets. Results show that the reform strengthened the functionality of the RP market and the monetary policy transmission channel to it. The error correction model indicates that although the adjustments to the equilibrium occurred through the call rate during the global financial crisis, they were processed through the RP rate in later periods. The ability of the RP rate to inform market liquidity conditions has improved.     

Finding diamonds in the rough: Analysts’ selective following of loss‐reporting firms

Investors face greater difficulty valuing loss‐reporting than profit‐reporting firms: losses may be due to very different reasons (e.g., poor operating performance or investments in intangibles, and financial accounting information is of more limited use for valuing loss‐making firms than profit‐making firms. Because of increased uncertainty about loss firms’ future financial and business viability, we hypothesize that financial analysts will be more selective when choosing to follow loss firms than profit firms, with the result that “abnormal” analyst following will be more informative to investors regarding the future performance of loss firms than profit firms. Consistent with this prediction, we find that abnormal analyst coverage is useful for predicting firms’ future prospects, and is more strongly associated with future performance (stock returns and ROA) for loss firms than for profit firms. The market, however, does not seem to use this useful information when pricing loss firms: for loss firms a portfolio investment strategy based upon abnormal analyst following can generate positive excess returns over 1‐ to 3‐year holding periods. These results are stronger for persistent‐loss firms than for occasional‐loss firms. We conclude that abnormal analyst following contains useful information about firms’ future prospects, and even more so for loss firms than for profit firms.     

A multi-agent bilateral bargaining model with endogenous protocol

People do bargain over how to bargain. We examine the role of individuals’ ability to pursue certain bargaining protocols in a multi-agent bilateral bargaining model. Bargaining protocols are not completely settled, but will emerge endogenously in equilibrium. We show that players’ ability to partially influence bargaining protocols plays a crucial role in determining equilibrium outcomes. When discounting is not too high, there are multiple subgame perfect equilibria, including inefficient ones. As the number of players increases, both the set of discount factors that support multiple equilibrium outcomes and the set of the first proposing player’s equilibrium payoffs expand. The maximum loss of efficiency increases with respect to the discount factor. We would like to thank Hongbin Cai, John Conlon, Andrew Daughety, Taiji Furusawa, Byoung Heon Jun, Akira Okada, Ping Wang, and two anonymous referees for their comments and suggestions. Both authors gratefully acknowledge financial support from the Social Sciences and Humanities Research Council of Canada.     

Corporate Social Responsibility and Credit Ratings

This study provides evidence on the relationship between corporate social responsibility (CSR) and firms’ credit ratings. We find that credit rating agencies tend to award relatively high ratings to firms with good social performance. This pattern is robust to controlling for key firm characteristics as well as endogeneity between CSR and credit ratings. We also find that CSR strengths and concerns influence credit ratings and that the individual components of CSR that relate to primary stakeholder management (i.e., community relations, diversity, employee relations, environmental performance, and product characteristics) matter most in explaining firms’ creditworthiness. Overall, our results suggest that CSR performance conveys important non-financial information that rating agencies are likely to use in their evaluation of firms’ creditworthiness, and that CSR investments—particularly those that extend beyond compliance behavior to reflect what is desired by society—can lead to lower financing costs resulting from higher credit ratings.     

Travelers’ parasocial interactions in online travel communities

This study explores whether, through parasocial interaction (PSI), trust in other travel community users drives travelers’ satisfaction with those communities as well as their travel experiences. It further examines the moderating effect of the quantity of contact with the communities. A total of 334 responses from travel community users were collected in South Korea. The results suggest all trust dimensions (competence, benevolence, and honesty) are significant in developing PSI, predicting community satisfaction and travel satisfaction, while quantity of contact has a positive moderating effect only on the relationship between PSI and travel satisfaction. Theoretical and managerial implications are also discussed.     

Attitude Toward Globalization and Country-of-Origin Evaluations: Toward a Dynamic Theory

ABSTRACT

In theory, increased globalization should lead to greater openness to different cultures, thereby reducing consumer ethnocentrism and resulting in improved consumer perceptions and behavior with respect to foreign products. However, empirical studies testing the impact of globalization have met with mixed results possibly due to the effects of globalization occurring at different levels in the mind-sets among consumers. This notion of “multi-layered consciousness” and its effects on country of origin image are proposed and tested in a theoretical model incorporating a dynamic theory of globalization, to supplement the conventional theory of country-of-origin effects. As predicted, results showed that country-of-origin image is negatively influenced by consumer ethnocentrism, but is not positively influenced by globalization, despite consumers' self-perceived global mindsets (i.e., positive attitude toward globalization and subsequent global openness).     

Exploring the effect of structural patent indicators in forward patent citation networks on patent price from firm market value

This paper introduces structural patent indicators in the forward patent citation networks (FPCNs). Using the estimates of their relationship with firm market value, it explores the effect of the structural patent indicators on patent price. When applied to US smartphone industry and US drug and biotechnology industry, the common finding is that a firm's registered patent gets higher price if influenced faster by the previously registered patents of the same firm through self-citations. The empirical results imply that merely counting forward citations, shown related to patent price by the previous works, is insufficient; the structural properties in FPCNs are essential for the more accurate estimation of patent price. They also show that the relationships between structural patent indicators in the FPCNs and patent price are different between industries. It urges the necessity of selecting structural patent indicators, well fitted to each industry, for the better patent valuation using forward citations.     

Modelling roles of task‐technology fit and self‐efficacy in hotel employees' usage behaviours of hotel information systems

The purpose of this study was to examine the relationship between hotel information system (HIS) users' personal perceptions and beliefs of the given system and their daily routine usage intention via the technology acceptance model (TAM), considering the two external variables (motivational variables) of the model — ‘task‐technology fit’ (extrinsic motivation; system feature) and ‘self‐efficacy’ (intrinsic motivation; personal feature). Data were collected from hotel employees of 13 upscale hotels in Jeju, South Korea, and path analysis was utilised to test structural model and hypotheses. The results provided empirical support for an extended TAM, and verified its robustness in predicting hotel employees' intention to use a HIS. Copyright © 2010 John Wiley & Sons, Ltd.