Volatility, Efficiency, and Trading: Further Evidence

Along the lines of Amihud and Mendelson (1987a, 1989,1991), this study investigates the unique trading mechanism of the Korea Stock Exchange (KSE) and its intraday behavior of stock price volatility. The evidence from this study indicates that the introduction of an additional clearing procedure at the afternoon closing makes price discovery process more efficient than before from the viewpoint of stock price volatility. Hence, such trading mechanisms can be applied to emerging stock markets as well as developed stock markets. In addition, based on intraday analysis, stock price volatilities appear to occur mainly during the trading period, not during the lunch break or overnight period. Consequently, the results confirm the previous studies that information arrival and trading activities are the main sources of volatility.     

WINNER-HELP-LOSER GROUP FORMATION IN RENT-SEEKING CONTESTS*

We define a winner-help-loser group in a rent-seeking contest as follows: (a) the member players compete noncooperatively to win the rent, and (b) if a member player wins the rent, he helps the losing member players according to the previously written agreement. We demonstrate that one and only one winner-help-loser group is formed voluntarily. One important consequence of such group formation is that rent dissipation is small relative to individual rent seeking. Therefore, such group formation decreases the social cost associated with rent seeking and thus decreases the economic inefficiency of rent seeking.     

The extension of social security coverage in developing countries

We study the dynamic general equilibrium effects of introducing a social pension program to elderly informal sector workers in developing countries who lack formal risk sharing mechanisms against income and longevity risks. To this end, we formulate a stochastic dynamic general equilibrium model that incorporates defining features of developing countries: a large informal sector, private transfers as an informal safety net, and a non-universal social security system. We find that the extension of retirement benefits to informal sector workers results in efficiency losses due to adverse effects on capital accumulation and the allocation of resources across formal and informal sectors. Despite these losses recipients of social pensions experience welfare gains as the positive insurance effects attributed to the extension of a social insurance system dominate. The welfare gains crucially depend on the skill distribution, private intra-family transfers and the specific tax used to finance the expansion.     

Speed of convergence to market efficiency: The role of ECNs

Chordia, Roll and Subrahmanyam (2005, CRS) estimate the speed of convergence to market efficiency based on short-horizon return predictability of the 150 largest NYSE firms. We extend CRS to a broad panel of NYSE stocks and are the first to examine the relation between electronic communication networks (ECNs) and the corresponding informational efficiency of prices. Overall, we confirm CRS's result that price adjustments to new information occur on average within 5–15 min for large NYSE stocks. We further show that it takes about 20 min longer for smaller firms to incorporate information into prices. Most importantly, we demonstrate that the speed of convergence to market efficiency is significantly related to the type of trading platform where orders are executed, even after controlling for relative order flows, trading costs, volatility, informational effects, trading conditions, market quality, institutional trading activity, and other firm-specific characteristics. Our findings provide direct answers and insights to issues raised in a recent SEC concept release document.     

Frontline service employees’ customer-related social stressors, emotional exhaustion, and service recovery performance: customer orientation as a moderator

This study investigates the structural relationships among customer-related social stressors (disproportionate customer expectation, ambiguous customer expectation, disliked customers, and customers?? verbal aggression), emotional exhaustion, and service recovery performance, with customer orientation (CO) serving as a moderator between customer-related social stressors and emotional exhaustion as well as emotional exhaustion and service recovery performance. The study uses data collected from a survey of 1,014 frontline service employees in Korea??s tourism service sectors. The results indicate that customer-related social stressors positively influence emotional exhaustion; emotional exhaustion negatively influences service recovery performance; and CO acts as a moderator. CO moderates both the effects of customer-related social stressors on emotional exhaustion and those of emotional exhaustion on service recovery performance, by weakening the effects for higher CO employees. This study contributes to both theory and practice by combining the four constructs of customer-related social stressors, emotional exhaustion, service recovery performance, and CO in addition to examining their relationships while focusing on customer-related factors.     

Characteristics and Information Value of Credit Watches

We analyze credit watch and rating actions to better understand the role of credit watches in the credit rating process. We find that watch actions are more frequently prompted by specific, publicly known events than are rating actions. The likelihood that a watch action precedes a rating action varies systematically with proxies for investor demand for credit quality information and the adverse consequences of issuing a rating change prematurely. Credit watches occur more often in response to deterioration in credit quality, and issuers make concerted efforts to address the concerns that prompted down watches. Down watches are less likely than up watches to indicate the direction of the subsequent rating change. Watch announcements are associated with abnormal stock returns, indicating that credit watch actions are significant information events. Our results suggest that credit watches are informative and facilitate the stability of ratings by allowing firms to correct deficiencies and prevent downgrades.     

An Empirical Examination of the Parimutuel Sports Lottery Market versus the Bookmaker Market

A sports lottery in Korea presents a unique opportunity for comparing a parimutuel‐type sports lottery market against a bookmaker market outside the realm of horse racing. Using two‐ and three‐game soccer final‐score betting in the sports lottery market in Korea, which features matches in the English Premier League, we compare winning payoffs in this parimutuel‐type sports lottery against corresponding payoffs from an established bookmaker market in the United Kingdom. We find that for outcomes with relatively high payouts (that is, lower‐probability events), winning bets placed in the sports lottery market have greater payoffs than corresponding bets placed in the bookmaker‐based market. However, the opposite is true for outcomes with relatively low payouts (that is, higher‐probability events). Results suggest that participants in the sports lottery market tend to bet more toward high‐probability events than the amount implied by the bookmaker's odds. Results also suggest that the favorite‐longshot bias is still present in the bookmaker market, even when there is less threat of privately informed bettors than in horse racing.     

Expatriate utilization,subsidiary knowledge creation and performance: The moderating role of subsidiary strategic context

Little research examines the mechanisms for the relationship between expatriate utilization and subsidiary performance. Building on the knowledge-based view of the firm, we propose a multi-stage mediation model to explain how expatriate staffing promotes subsidiary financial performance. Our results underscore that expatriate utilization has an indirect, mediated effect on subsidiary financial performance through its links with subsidiaries’ knowledge creation and product performance. Adopting a moderated mediation approach, we also find that the indirect relationship between expatriate utilization and subsidiary product performance via subsidiary knowledge creation is strengthened by the context of transnational strategy as a moderating contingency.     

Does Institutional Blockholder Short‐Termism Lead to Managerial Myopia? Evidence from Income Smoothing

We examine institutional blockholders’ influence on income‐smoothing practices in the Korean market, which provides an interesting setting where family‐oriented chaebols dictate the corporate landscape and impede shareholder activism. The empirical results reveal that institutional shareholders with a short‐term (long‐term) investment horizon facilitate (constrain) managerial myopia. This positive (negative) association is most evident among firms with domestic institutional investors. Therefore, we argue that the presence of domestic institutional investors with transient investment goals incentivizes firms’ management to smooth out earnings.     

Desired recreation companionship and travel behaviour of people with disabilities

This study examines whether people with disabilities(PWD) participate in leisure and travel activities with their desired companions and if there are discrepancies between their social networks and real recreation companions. The recreation companionship and travel behaviour of PWD have not been thoroughly explored, particularly in non-Western contexts. Accordingly, data were collected from 494 respondents in South Korea, and findings suggest that there was a significant gap between companions PWD desire and those they actually maintain. Travel and tourism were the least frequent recreation activities for PWD. The results can provide managerial implications regarding practices of inclusive and accessible tourism.