Investor overlap and diffusion of disclosure practices

I develop and test an investor demand-driven explanation for why one firm’s change in voluntary disclosure behavior is emulated by some firms in the industry but not others. I focus on the overlap in institutional investor ownership between two firms as a mechanism by which a first-mover firm’s increase in disclosure prompts investors to seek a similar increase from a follower firm. Using 10-K market risk disclosures as my empirical setting, I find that a firm’s decision to follow a first mover in providing more quantitative information than is required by the SEC is positively associated with an increase in investor overlap from the prior year. I also find that the association is stronger for overlap in large institutional investors, consistent with their greater influence over managers, and for firms where investor uncertainty is high. This association is found after controlling for the herding effect documented in prior studies and after addressing potential endogeneity concerns. Overall, this evidence provides new insight into patterns of intra-industry disclosure behavior and highlights investor overlap as a communication channel and feedback mechanism that helps facilitate the diffusion of disclosure practices.     

Are tourists rational or irrational consumers?

The purpose of the study is to identify whether applying assumptions of consumer behavior in economics or marketing in the tourism context is validated. Therefore, this study investigated whether tourists, as subjects of consumption at a tourism destination, are rational. Also, additional work was performed to identify the determinants in rationality of tourists. Survey research through the three steps of instrument development has been conducted for those who visited the Jeju Island, South Korea. The adequate sample size of 280 pairs was employed for statistical analyses such as a multiple regression analysis. As a result, the study concluded that an application of the assumptions of consumer behavior in economics or marketing to decision-making of tourists’ consumption was inappropriate because the propensity of tourist expenditure at a tourism destination was evidenced as both rational and irrational. More discussion and implications were provided.     

Pitting real options theory against risk diversification theory: International diversification and joint ownership control in economic crisis

This study examines how MNE divestment decisions differ according to real options vs. risk diversification perspectives. We develop competing hypotheses in relation to international diversification and joint ownership control. Empirical results give consistent support to the real options perspective. We find that large MNEs with greater international diversification are less likely to divest their subsidiaries during times of economic crisis. The negative effect of joint ownership control is however manifested in both crisis-stricken and non-crisis country subsidiaries as well as in their interaction effect.     

Structure and Perceived Performance in Public Organizations

Abstract

The purpose of this study is to examine relationships and better-fits between organizational structure and performance in public organizations. This study takes into account multiple dimensions of organizational structure: span of control, organizational personnel size, global organizational red tape and personnel red tape. The relationships between the first two physical dimensions and perceived organizational performance are examined by taking different combinations of measures, such as raw measures, log-transformation measures and squared measures. The results of ordinal logistic regression models find that, except for span of control, the other structural dimensions have a negative influence on perceived organizational performance. While span of control shows a better-fit with perceived performance in a linear and positive direction, personnel size fits better in a log-linear relationship. Theoretical and practical implications are discussed in the conclusion.     

Analyst Forecasting Ability and the Stock Price Reaction to Forecast Revisions

We empirically identifysuperior analysts using their past forecasting track record fora specific firm's earnings and demonstrate that subsequent forecastannouncements by these superior analysts have a greater impacton security prices than do the forecasts of other analysts. Wefind that, in our sample, the price effects of this firm-specificforecasting ability do not spill over to other firms followedby the same analyst. We also demonstrate that an analyst's forecastingability with respect to the earnings of a certain firm is relativelymore important in the period immediately preceding an earningsannouncement by that firm.     

Trade Intermediation and the Organization of Exporters

Empirical papers show that successful exporting firms either use unaffiliated foreign trade intermediaries or own foreign wholesale subsidiaries. However, conventional trade theory models assume that producers can directly access foreign consumers. We introduce intermediaries in an international trade model where producers differ with respect to productivity as well as regarding their varieties' perceived quality and tradability. Trade intermediation is prone to frictions owing to the absence of enforceable cross‐country contracts while own wholesale subsidiaries require additional capital investment. The sorting pattern of firms depends on their degree of competitive advantage; the equilibrium prevalence of intermediation in the industry depends negatively on the heterogeneity among producers, and the market‐specificity of goods, and positively on expropriation risk. Using sectoral US export data by destination country, we confirm the empirical validity of these predictions.     

Cointegration,dynamic structure,and the validity of purchasing power parity in African countries

The purpose of this paper is to test the validity of the purchasing power parity (PPP) in Africa in the context of a multivariate error-correction model. This approach allows for the consideration of long-run elasticities as well as the dynamics of the short-run adjustment of exchange rates to changes in domestic and foreign prices. Monthly data for fourteen African countries are used, and the period examined is 1973:4 through 2007:7 (i.e., 412 observations). Results from long-run cointegration analysis, short-run error correction models, persistence profile analysis and variance decomposition all confirm the validity of PPP in these moderate-to-high inflation countries, where estimates of half-life deviations from PPP are found to be outside the range suggested by Rogoff (1996).     

Majority Shareholder Ownership and Real Earnings Management: Evidence from Korea

This article examines the influence of majority shareholder ownership on real earnings management. It investigates whether there is a conflict between or an alignment of majority and minority shareholders' interests. If majority shareholders' interests are aligned with those of minority shareholders, a greater majority shareholder ownership lowers real earnings management. On the other hand, if they are not aligned, majority shareholders' attempts to exploit minority shareholders will increase real earnings management. This study does not find a systematic relationship between majority shareholder ownership and real earnings management. However, real earnings management significantly decreases in the upward earnings management incentive bracket as majority shareholder ownership increases. This occurs primarily because majority shareholders are more sensitive to upward real earnings management, which has a negative effect on future performance. These results suggest that the larger the ownership of majority shareholders, the more they play a positive role in mitigating real earnings management. This positive role is only effective in the post‐Asian economic crisis period. These results may suggest that the economic crisis in Korea helped majority shareholders more conscious of the long‐term costs of real earnings management. These findings support the convergence‐of‐interests hypothesis, providing evidence by investigating real earnings management instead of accruals‐based earnings management.     

Who goes where and how? Firm and country characteristics in the choice of FDI type and location

This paper examines the roles of firm and country characteristics in determining multinationals' choice of foreign direct investment (FDI) type and location. Using Korean firm‐level data, we find that highly productive firms are more likely than their less efficient counterparts to invest in tough markets and choose a combined FDI strategy rather than a solely horizontal FDI or vertical FDI strategy across host countries. These findings, consistent with recent theories in international economics, indicate that firm and country heterogeneities play a significant role in determining the FDI strategy of a multinational enterprise.     

Macro Liquidity Risk,Money Growth,and the Cross-Section of Stock Returns: The Case of Korea

According to the homogeneity of money holding purpose, we decompose the broad money M2 into an underlying and a non-underlying part and propose innovations in future non-underlying M2 growth as a proxy for macro liquidity. In both the cross-sectional regression tests and the GMM tests, we find that risk related to innovations in future non-underlying M2 growth is strongly significantly priced in Korea, after controlling for the well-known risk factors and other macroeconomic variables. Meanwhile, risk related to innovations in future aggregate or underlying M2 growth is insignificantly priced. These results indicate that non-underlying M2 growth more directly affects macro liquidity than does aggregate or underlying M2 growth.