Macro and micro approaches in human resource development: context and content in South Korea

In this paper we examine human resource development (HRD) at various levels and in different dimensions. We develop a framework to locate the context and outcomes of HRD. Using South Korea as an example, we analyze the importance of human resources (HR) and HRD, providing some macro and micro empirical evidence, such as expenditure in the area of training and development (T&D) over time in various aspects. We also develop hypotheses regarding the relationship of spending on T&D. This is both organizational (e.g., product differentiation, learning culture) and HR (e.g., employee empowerment, long-term worker attachment to companies) aspects. The implications for business and management of developments in each of these areas are also spelt out.     

Stock Returns and Operating Performance of Securities Issuers

We examine long‐run stock returns and operating performance around firms’ offerings of common stock, convertible debt, and straight debt from 1985 to 1990. We find that pre‐issue abnormal returns are positive and significant for stock issuers, but not for convertible and straight debt issuers. The post‐issue mean returns show that common stock and convertible debt issuers experience underperformance during the post‐issue periods, but straight debt issuers do not. Consistent with these results, common stock issuers experience the best pre‐issue operating performance among all three types of issuers, and operating performance declines during the post‐issue periods for common stock and convertible debt issuers. Using a new approach in linear model estimations to correct heteroskedasticity and to adjust for finite sample, we find a positive relation between post‐issue operating performance and issue‐period stock price reactions. The results suggest that future operating performance is anticipated at the issue and that securities issues provide information on issuers’ future performance.     

Earnings growth and the bull market of the 1990s: Is there a case for rational exuberance?

This paper examines whether permanent earnings growth, crucial to stock valuation, increased during the 1990s, as suggested by proponents of the new economy. Using S&P 500 earnings for the period of 1951–2000, we do not find strong evidence of either a one-time structural break or gradual change. However, the confidence interval on permanent earnings growth is wide enough to include an increase that is roughly consistent with the bull market of the late 1990s. Thus, we cannot reject a rational basis for that exuberance.     

Globalization and labour rights: the case of Korea

In this contribution the background of Korean industrial relations (IR) is reviewed, followed by analysis of more recent changes with a special focus on globalization issues. We argue that globalization has both positive and negative effects on IR issues in Korea. There was a positive side of globalization in terms of worker rights, hence basic labour rights have been improved to meet global labour standards. However, there was a negative side to it as well in terms of working conditions and employment practices, which brought substantial setbacks for unions and rapidly eroded their power base. This negative side has more clearly appeared after the recent economic crisis.     

Derivatives trading,volatility spillover,and regulation: Evidence from the Korean securities markets

Unlike the U.S. and Japanese securities markets, we find new evidence of volatility spillover between index stocks and non‐index stocks following the introductions of index derivatives trading in the Korean securities markets. We further find that the degree of volatility spillover is closely related to the level of market deregulation; significant return volatility spills over from non‐index to index stocks during deregulation period but in the opposite direction during post‐deregulation period. Our empirical results show that the former volatility spillover from non‐index to index stocks can be explained by the transitory contagion effect associated with the 1997 Korean financial crisis and the subsequent market deregulation, whereas the latter volatility spillover from index to non‐index stocks is attributed to the permanent information spillover effect. This latter evidence suggests that the information regarding investors' expectations on the future common market factors is first reflected into the return volatility of index stocks and then transferred to the trading of non‐index stocks against which derivatives are not traded. Our results are robust to different estimation and sample construction methods. © 2009 Wiley Periodicals, Inc. Jrl Fut Mark 29:563–597, 2009     

Conclusion: Korean business and management – the end of the model?

Recent financial crisis has raised questions about the underpinnings and longevity of economic success in Asia, and has reminded us to be sceptical of pundits and the eponymous populist predictions relating to the region. Several perspectives can guide the analysis and evaluation of industrialization, from ‘state’ versus ‘market’, ‘internal’ versus ‘external’, and ‘macro’ versus ‘micro’. Companies in Korea as ‘latecomers’ have pursued ‘catch-up’ strategies. However, Korean corporate capabilities reside in a restricted number of industries, firms and functions (production), and are poor elsewhere, such as in marketing, technology (design and development) and organization, and small and medium-sized enterprises. Furthermore, many factors regarded once as sources of Korea's success are now seen as weaknesses. The future challenges facing Korea include its dirigiste economy, organizational structures and governance, financial transparency and labour market flexibility. While there are undoubted problems, its urgent tasks are not insurmountable.     

The evolution of the monetary policy regimes in the U.S.

The existing literature on U.S. monetary policy provides no sense of a consensus regarding the existence of a monetary policy regime. This article explores the evolution of U.S. monetary policy regimes via the development of a Markov-switching model predicated on narrative and statistical evidence of a monetary policy regime. We identified five regimes for the period spanning 1956:I?C2005:IV and they roughly corresponded to the Chairman term of the Federal Reserve, except for the Greenspan era. More importantly, we demonstrate that the conflicting results regarding the response to inflation for the pre-Volcker period in the existing literature is not attributable to the different data but due to different samples, and also provided an insight regarding the Great Inflation??namely, that the near non-response to inflation in the early 1960s appears to have constituted the initial seed of the Great Inflation. We also find via analysis of the Markov-switching model for the U.S. real interest rate, that the regime changes in the real interest rate follow the regime changes in monetary policy within 2?years and that the evolution of real interest rate regimes provides a good explanation for the conflicting results regarding the dynamics of real interest rate.     

Does corporate diversification by business groups create value? Evidence from Korean chaebols

We investigate the valuation effects of diversification activities by Korean business groups known as chaebols. Employing an extensive dataset of Korean firms and accounting for the endogeneity problem associated with firms' diversification decisions, we offer reconciling evidence that unrelated diversification by Korean firms erodes firm value, but their related diversification does not decrease firm value. Undocumented in the existing literature, we further provide new evidence that a firm's affiliation to a large business group amplifies the valuation effect of firm-level diversification, such that the non-negative or weak positive valuation effect of related diversification is stronger for large business group firms. These findings are supportive of the notion that the unique characteristics of large business group firms such as stronger internal factor markets enable these firms to take advantage of the synergic benefits associated with related diversification. Our findings are robust to different model and sample specifications.     

CULTURE,CORPORATE GOVERNANCE,AND DIVIDEND POLICY: INTERNATIONAL EVIDENCE

We find that Hofstede's cultural dimensions—uncertainty avoidance, masculinity, and long‐term orientation—remain significant in the determination of firms’ dividend policies, even after controlling for corporate governance. We also show that this association varies with the strength of corporate governance, measured by the degree of investor protection. Hence, national culture and investor protection independently affect firms’ dividend payouts but also interact with each other, such that strong investor protection induces higher dividend payouts in high uncertainty avoiding and/or highly masculine cultures. Our results provide strong evidence that cultural differences matter and offer additional power in explaining variations in dividend policies.     

Globalization and transformation of human resource management in South Korea

Developments in the area of globalization, labour markets and human resource management (HRM) are topical and have high profiles. Yet they are often underpinned by several older and implicit views. This paper examines five propositions in this respect. We discuss globalization, often taken as driving such developments, and the role of supportive and limiting factors to its influence. We use the case of South Korea, as the main direction of change here is seen as from 'traditional' employment security and seniority-based systems of employee resourcing and rewarding, towards 'newer' flexible and performance-based ones. This seems, on the surface, a case of practice transfer in a somewhat inhospitable climate. We examine and evaluate the restraints, direction and extent of such changes, and arguments that HRM systems are being transformed by such developments. We find that the situation is more constrained and ambiguous.