Review of consumer activism in Korea, 1910–1995: A political-economic approach

Consumer activism in Korea has a long history, starting from an anticolonial social movement and developing into one which targets consumers' interests at both individual and societal levels. As a social movement, consumer activism needs to be understood within a political and economic environment, particularly in Korea which has gone through dynamic changes both politically and economically. While understanding of the political environment sheds further light on governmental consumer policies as well as manifested consumer activism, eminent consumer problems and issues were acknowledged according to the stage of economic development. This political-economic approach deepens our understanding of the Korean consumer movement and provides a framework for analyzing consumer activism in other Eastern Asian countries which are experiencing similar political or economic developments.

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Überblick über Verbraucheraktivismus in Korea von 1910 bis 1995: ein politischökonomischer Ansatz

Zusammenfassung Verbraucheraktivismus hat in Korea eine lange Geschichte, die als soziale antikolonialistische Bewegung begann und sich zu einer Bewegung entwickelt, die die Interessen der Verbraucher sowohl auf individueller Ebene wie auch auf gesellschaftlicher Ebene im Visier hat. Als soziale Bewegung muß Verbraucheraktivismus in einem politischen und ökonomischen Umfeld gesehen werden, insbesondere in einem Land wie Korea, das große politische und ökonomische Umwälzungen durchlaufen hat. Während ein Verständnis der politischen Umstände Erkenntnisse über staatliche Verbraucherpolitik, aber auch über sonstige Verbraucheraktivitäten, ermöglicht, ist es der Stand der wirtschaftlichen Entwicklung, der darüber bestimmt, welche Verbraucherprobleme und -themen in den Vordergrund rücken. Dieser kombinierte politisch-ökonomische Ansatz ermöglicht ein vertieftes Verständnis der koreanischen Verbraucherbewegung und bietet auch einen Bezugsrahmen für die Analyse der Verbraucheraktivitäten in anderen ostasiatischen Ländern, die eine ähnliche politische und ökonomische Entwicklung wie Korea erleben.

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Kee-Choon Rhee is a Professor in the Department of Consumer & Child Studies, the Seoul National University, Seoul, Korea 151–741. Jinkook Lee is an Assistant Professor of Retail & Consumer Science, University of Tennessee, 1215 West Cumberland Avenue, Knoxville, Tennessee 37996-1900, U.S.A.The uthors thank Robert N. Mayer, Robert O. Herrmann, and Loren V. Geistfeld for their insightful comments.     

Developing an effective deep support network for individual investors

Providing investment research to meet the needs of the growing number of individual retail investors is an important opportunity. The broad variation in current stock research performance challenges investors to evaluate and select stock research. Evaluating stock research is difficult because developing stock research is a difficult and complex task. The research is largely an expression of the tacit knowledge of the analysts. This paper presents the concept, an effective deep support network to aid investors. An effective deep support network provides appropriate information from various providers that can be customisable and empowering to the individual investors. It allows them to incorporate their own judgment and to learn through experience. By meeting the real needs of retail investors, an effective deep support network could provide a competitive advantage for firms in financial services especially stock research firms.     

STOCK MARKET REACTION TO ETHICAL INITIATIVES OF DEFENSE CONTRACTORS: THEORY AND EVIDENCE

This paper offers an Investor Decision Framework (IDF) to describe and measure investor behavior toward social responsibility information. This framework seeks to explain how investors perceive the effects of social responsibility information on firm value. The formation in 1986 by 32 major defense contractors of the Defense Industries Initiative (DII) provides an ideal example to assess stock market reaction to an ethical initiative. The performance of the DII firms was compared with that of a control group of non-DII defense firms, which did not sign the agreement, in order to measure and determine the extent to which the market placed substance on the DII as a public commitment to ethics. We initially posited that the DII firms stock price would move in a significantly positive direction. However, when our analysis revealed a significant negative impact not only on DII, but also on non-DII defense stock prices, we were forced to reject thisa priorihypothesis. The market interpreted this ethical initiative as (i) a precursor of future sanctions towards firms engaged in defense contracting or (ii) as a penalty for social irresponsibility imposed by socially conscious investors. Either way, it would have a negative impact upon future cash flows.     

Financial crisis and relative productivity dynamics in Korea: evidence from firm-level data (1992–2003)

We have estimated the relative TFP growth at firm level and analyzed the firm dynamics in view of entry and exit of firms in Korea during 1992–2003, which includes the turbulent financial crisis of 1997–1998. Following Pyo and Ha, Hitotsubashi J Econ 48(1): 67–81, (2007), we have adopted a gross output model rather than a value added model of relative TFP analysis. We have found that the cyclical variation of productivity growth plays a dominant role in the decomposition effects before and after the 1997 financial crisis in Korea. Productivity growth is modest before the crisis and strong after the crisis owing to the recovering market efficiency. There is the likelihood that the productivity growth of stayers during the post-crisis period was significantly higher than new entrants. The net entry effect is found to be more sensitive in small business and export-based firms than in large business and domestic market-based firms. Our findings suggest that Korean firms have recovered a modest level of technical change after its severe financial crisis owing to the improvement of management transparency and the build-up of market efficiency during the IMF-mandated restructuring process. But since the entry effect is estimated to be still negative in Manufacturing and the exit effect is negative in Service sector after the crisis, the Korean economy has not fully recovered its metabolism in the post-crisis period and still lacks a creative destructive process to resume another round of sustainable growth path.     

Short sales and speed of price adjustment: Evidence from the Hong Kong stock market

We present empirical evidence that short sales contribute to market efficiency by increasing the speed of price adjustment to not only private/public firm-specific information but also market-wide information. Shortable stocks are characterized by weaker trade continuity and stronger quote reversals. They adjust faster to new information than non-shortable counterparts. These findings remain robust even in an “up” market condition in which short sales are not binding. The amount of information incorporated in each trade is also significantly higher for shortable than non-shortable stocks in both “up” and “down” market conditions. After controlling for firm size, trading volume, liquidity, price and option trading, short sales stand out as one of the significant factors that speed up the price adjustment.     

Foreign institutional ownership and stock market liquidity: Evidence from Indonesia

From January 2002 to August 2007, foreign institutions held almost 70% of the free-float value of the Indonesian equity market, or 41% of the total market capitalization. Over the same period, liquidity on the Jakarta Stock Exchange improved substantially with the average bid–ask spread more than halved and the average depth more than doubled. In this study we examine the Granger causality between foreign institutional ownership and liquidity, while controlling for persistence in foreign ownership and liquidity measures. We find that foreign holdings have a negative impact on future liquidity: a 10% increase in foreign institutional ownership in the current month is associated with approximately 2% increase in the bid–ask spread, 3% decrease in depth, and 4% rise in price sensitivity in the next month, challenging the view that foreign institutions enhance liquidity in small emerging markets. Our findings are consistent with the negative liquidity impact of institutional investor ownership in developed markets.     

The equilibrium price of futures contracts: A result drawn from capital asset pricing model

A recent study shows that separation theorems in the stock and forward market literatures may not hold in an integrated financial market; therefore, the securities market may influence futures trading. This article investigates the securities market influence on the futures price. The result shows that although the futures price incorporates the investor's expectation about the future spot price, it generally is not a best estimate of the spot price. In addition, it is shown that the speculative activity can destabilize the cash market for some commodities, if initially, the underlying cash price is highly volatile.