Permanency of CSR Activities and Firm Value

So far overlooked by the international business ethics literature, we introduce, characterize, and normatively analyze the use of affective ties and networks in South Korea from an ethical point of view. Whereas the ethics of using Guanxi in China has been comprehensively discussed, Korean informal networks remain difficult to manage for firms in South Korea due to the absence of existing academic debate and research in this field. In this study, we concentrate mainly on the question of whether foreign firms will and can use affective ties in Korea. The informal social network forms are classified and contrasted with the conventional ethical approaches used in international business ethics (relativism, universalism, and social contract theory) to assess which categories can be regarded as ethical or unethical. Finally, foreign firms are advised how to cope with and use different affective network types. Although the nature of affective ties and networks in Korea differs from that found for instance in China (Guanxi), consistent with the conclusion of prior research, we recommend particularistic analysis and decision making regarding the circumstances in which to conclude affective ties and networks and when to opt out. We conclude that foreign firms in Korea should invest in establishing Inmaek, refrain from engaging in Yonjul, and support host country nationals’ Yongo ties. Moreover, it is suggested that foreign firms should find ways to monitor and manage informal ties effectively.     

Evaluation of the strategies and performance of low ROI market share leaders

This study examines the strategies of 41 businesses which are market share leaders, but have poor performance. Hypotheses are tested relating to market stability and product demand characteristics, as well as organizational commitments and competitive strategies.     

The Value-relevance of Earnings and Book Value, Ownership Structure, and Business Group Affiliation: Evidence From Korean Business Groups

Abstract:  We investigate the quality of two primary accounting summary measures, i.e., earnings and book value, provided by firms belonging to Korean business groups (chaebols). We find that the value-relevance of earnings and book value is significantly smaller for firms affiliated with business groups. We also find that cross-equity ownership (a proxy for the agency problem between controlling and minority shareholders) negatively affects value-relevance, while foreign equity ownership (a proxy for the monitoring effect) positively affects value-relevance. This evidence is consistent with the view that the poor quality of earnings and book value provided by chaebol-affiliated firms is due to the inherently poor governance structure of chaebols.     

The impact of the SARS outbreak on Taiwanese hotel stock performance: An event-study approach

The severe acute respiratory syndrome (SARS) outbreak in 2003 weakened the Taiwanese economy. The tourism industry suffered the most, experiencing the highest stock price decline (approximately 29 percent) within a month of the SARS outbreak. This research examined the effect of the SARS epidemic on Taiwanese hotel stock price movements using an event-study approach. Seven publicly traded hotel companies experienced steep declines in earnings and stock price during the SARS outbreak period. On and after the day of the SARS outbreak, Taiwanese hotel stocks showed significantly negative cumulative mean abnormal returns, indicating a significant impact of the SARS outbreak on hotel stock performance. Empirical findings could be used to prepare businesses for the similar epidemics, such as a deadly bird-flu epidemic.     

Antecedents and consequences of relationship quality in hotel industry

This study investigated the antecedents and consequences of relationship quality. This study will help hotel managers to develop and implement effective relationship marketing strategies. Effective usage of relationship marketing strategies will be able to improve hotel performance such as share of purchases, relationship continuity, and word of mouth. To analyze data collected from 12 five-star hotels in Seoul, the linear structural relationship (LISREL) model was used to identify structural characteristics of relationship management between service providers and guests. The empirical results of this study were threefold. First, greater service providers’ relational and customer orientation resulted in higher relationship quality. Second, better service providers’ attributes resulted in higher relationship quality. Third, higher relationship quality resulted in higher share of purchases and better relationship continuity and share of purchases.     

Analyst Optimism and Incentives under Market Uncertainty

We examine how analysts’ changing incentives driven by changes in market uncertainty affect their forecast optimism. Analysts issue more optimistically biased earnings forecasts and buy recommendations under high market uncertainty (VIX). The lower reputational costs and larger benefits of optimistic output explain the increased optimistic output: Analysts are less likely to be penalized for inaccuracy and can stimulate more trading activity from optimistically biased output when market uncertainty is high. We find that the likelihood of analysts’ turnover decreases, while the trading volume associated with optimistic output increases, with VIX. No evidence suggests that analysts’ self‐selection affects our findings on optimism and market uncertainty.     

The Impact of Dividend Covenants on Investment and Operating Performance

This paper examines the influence of dividend covenants in corporate bonds on investment and operating performance. Prior literature analytically demonstrates that by limiting dividend distribution to shareholders, dividend restrictions effectively place a minimum on investment expenditures. This suggests a positive relation between dividend covenants and investment. The literature also conjectures that the influence of dividend covenants on investment (1) mitigates the under‐investment problem associated with debt financing; or (2) exacerbates over‐investment. We empirically document that the presence of dividend covenants is associated with a higher level of investment and poorer future performance. Further analyses confirm that the higher level of investment is consistent with dividend covenants exacerbating over‐investment, not mitigating under‐investment. Our results shed light on the cost aspect of dividend covenants proposed in prior literature.     

How CSR Leads to Corporate Brand Equity: Mediating Mechanisms of Corporate Brand Credibility and Reputation

The purpose of this study is to investigate the relationships among corporate social responsibility (CSR), corporate brand credibility, corporate brand equity, and corporate reputation. Structural equation modeling analysis provided support for the hypotheses from a sample of 867 consumers in South Korea. The results showed that CSR has a direct positive effect on corporate brand credibility and corporate reputation. In addition, the results indicate that corporate brand credibility mediates the relationship between CSR and corporate reputation. Moreover, corporate brand credibility mediates the relationship between CSR and corporate reputation. Finally, the relationship between CSR and corporate brand equity is sequentially and fully mediated by corporate brand credibility and corporate reputation. The theoretical and managerial implications of the results and limitations are discussed, and future research directions are suggested.     

Comparative trends in global communication networks of #Kpop tweets

This exploratory study is designed to provide an in-depth understanding of the communication world that Twitter mediates in the context of global conversations centering on the topic of Korean pop music (Kpop). Drawing on the theoretical framework of the duality of media, this study proposes that the multifaceted communication world that Twitter mediates can be understood as a result of interactions between Twitter users and the structure of Twitter. We collected all Tweets including the hashtag #kpop from November 9, 2011 to February 15, 2012, and then applied the webometric technique to visualize the #kpop Twitter networks across various regions of the world. We examined the use of URLs and hashtags in #kpop Tweets and found that Twitter use varied across regions, forming various communication networks. The results suggest that Twitter’s technological design can shape communication patterns as well as structures.