Recent Issues
Vol.19/1 (2013, June)
Reexamining the Pay Differentials-Organizational Outcomes Relationship in Korea: The Role of Organizational Identification
Author Jisung Park, Seongsu Kim, Hyunjoong Yoon
Keywords Pay Differentials, Turnover, Organizational Identification, Financial Performance, and Korea
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This research examines the effects of pay differentials on financial
performance and employee turnover in Korea by considering a critical
employee-based factor: organizational identification. Incorporating
tournament theory and social identity theory, authors theorize that pay
differentials increase financial performance and employee turnover without
considering employees’ organizational identification. If considered, however,
whereas the positive effects of pay differentials on financial performance
will be weaker, the effects on turnover will be stronger. Using a sample of
Korean cross-industry firms, results show pay differentials have a positive
influence on only financial performance. Also, as predicted, while the positive relationship between pay differentials and financial performance
became weaker, the relationship with turnover became stronger when
employees’ organizational identification is high. Theoretical and practical
implications for strategic pay structures are discussed.
Vol.19/1 (2013, June)
Behavioral Finance: A Survey of the Literature and Recent Development
Author Hyoyoun Park, Wook Sohn
Keywords Behavioral finance, Market anomalies, Market efficiency, Survey of literature
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This paper summarizes recent studies in behavioral finance—particularly
regarding market anomalies and investor behavior—that are not reconciled
with the traditional finance paradigms. This paper differs from previous
survey literature in several aspects. We introduce more recent papers in the
field, more literature on behavioral corporate finance, and provide statistics
on the recent trends that are explored in behavioral finance papers. We expand
the research scope to studies on Korean financial markets, introduce
specific funds using behavioral finance techniques, and discuss the challenges
facing behavioral finance.
Vol.18/2 (2012, December)
The Hazards of Leapfrog: Search Routines for Alliance Partner and Evolution of Organizational Capabilities
Author Jonghoon Bae
Keywords Exploration, Search, Capability Development, and Co-evolution
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This study presents an evolutionary model of capability development
and examines the role of strategic alliance in the evolution of organizational
capabilities. In particular, this study begins with the observation
that each alliance partner’s capability development co-evolves. This study
contributes to the literature on capability development by showing the
following: (1) a firm’s strategic alliance is ‘fitness-enhancing’ when its
partners’ learning is ‘ineffective’; (2) without making additional efforts
(i.e., in-house development), a firm is able to employ strategic alliances
and to balance between exploitation and exploration to the extent that its
(potential) partners are not effective learners; and (3) a firm is unlikely to
balance between exploitation and exploration to the extent that its (potential)
partners are effective learners.
Vol.18/2 (2012, December)
Has Regulation G Improved the Information Quality of Non-GAAP Earnings Disclosures?
Author HAN YI
Keywords Non-GAAP (Pro-forma) Earnings; Regulation G; Sarbanes-Oxley Act of 2002; Strategic Disclosures; Earnings Informativeness
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Based on hand-collected non-GAAP earnings disclosures from 2001
to mid 2004, this paper finds that firms with communication motives,
proxied by historically low returns-GAAP earnings relation, are more likely
to disclose non-GAAP earnings in the post-Reg G period than in the pre-
Reg G period. In contrast, firms with opportunistic motives, proxied by
GAAP loss and negative GAAP EPS changes, are less likely to disclose non-
GAAP earnings in the post-Reg G period than in the pre-Reg G period.
With additional test results, the findings of this paper appear consistent
with Congress’ and the SEC’s intervention in pro-forma reporting practices
resulting in improvements in the quality of information provided in non-
GAAP earnings disclosures.
Vol.18/2 (2012, December)
Honesty and Intermediation: Corporate Cheating, Auditor Involvement and the Implications for Takeoff
Author BRISHTI GUHA
Keywords Corporate governance, auditing, disclosure, inequality and takeoff, general equilibrium, repeated games
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We examine honesty and credible auditing in firm-investor relations in a
repeated game of imperfect information, embedded in a general equilibrium
framework. Informed auditors enhance credibility over a range of audit fees
– despite the auditor’s incentive to collude – provided the probability of
detection is imperfectly correlated across clients.
Auditing can enhance growth especially for a relatively egalitarian
distribution of wealth. We show that audit fees must be neither too high nor
too low to enhance client credibility, highlight the role of mandatory audit
fee disclosure, interpret international differences in shareholding patterns
and uncover a possible rationale for audit industry concentration.
Vol.18/2 (2012, December)
Default Prediction for Small-Medium Enterprises in Emerging Market: Evidence from Thailand
Author WANIDA SIRIRATTANAPHONKUN,SULUCK PATTARATHAMMAS
Keywords credit risk model, SMEs, Thailand, MDA, Logit model
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Small-medium enterprises (SMEs) play an important role in the economy
worldwide and they normally need to borrow funds from financial
institutions. Thus, an accurate credit risk model to predict the probability
that these firms might be bankrupt and cannot pay back the loans on
time is very crucial. However, the studies based on SME data are very rare
especially for those in emerging markets. This study develops the SME
models by employing both the Multivariate Discriminant Analysis (MDA)
and Logistic Regression Analysis (Logit) model in predicting bankruptcy
of SMEs in Thailand. The samples cover the period 2000 – 2010. The
result shows that the Logit model gives higher predictive accuracy level at
85.5 percent for out-of-sample test. Moreover, the combined forecasts of
bankruptcy firms from both MDA and Logit models could help achieve even
higher predictive accuracy level.
Vol.18/2 (2012, December)
An Exploratory Meta-Analysis of Gender Differences in the Evaluation of Advertisements
Author JUNG-CHAE SUH
Keywords Gender Differences, Self vs Others, Visual vs. Verbal, Meta- Analytic Test, Advertising, Brand Attitude, Purchase Intention, Cognitive Resource Matching
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Although some studies have shown gender differences in the evaluation
of messages in advertisements, these differences have not been strongly
supported by empirical evidence. Using a meta-analytic technique, this
study analyzes the effect sizes of the existing studies on this topic to
determine which factors vary the results of the studies..
The results of the exploratory analysis for brand attitudes toward
advertisements support both the vividness theory and the sex-role and
social dominance theories. However, for purchase intentions, the results
do not support both theories. Women show more purchase intentions than
men in the evaluation of advertisements, regardless of the message type.
Vol.18/1 (2012, June)
The Impact of Horizontal Merger Between Manufacturers on Channel Pricing Behaviors
Author KYUNG JIN KIM, INSEONG SONG
Keywords pricing, channel interaction, horizontal merger, new empirical industrial organization
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This paper studies the impact of a horizontal merger between two
manufacturers on channel pricing behaviors. We utilize the new empirical
industrial organization approach in which demand and supply side
behaviors are derived from economic theories. We apply our model to a
market data set obtained from the toilette paper category in which a major
merger between Kimberly Clark and Scott happened. We find the impact
of the merger on retailer-manufacturer interaction is heterogeneous across
manufacturers. The merged manufacturer turns out to become tougher
in its pricing. However, we do not find any evidence that the merge makes
other manufacturers tougher.
Vol.18/1 (2012, June)
I Will Like It Later But Not Now: The Roles of Temporal Distance and Guilt in Hedonic Product Evaluation
Author KIWAN PARK,YOUNGRONG KIM
Keywords construal level, guilt, hedonic consumption, temporal distance
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How and why does temporal distance influence consumers’ evaluation
of future hedonic consumption? Drawing upon the construal level theory,
we propose that guilt is a lower-level construal than hedonic pleasure and
becomes salient in the immediate versus distant consumption. As such, we
hypothesize that consumers evaluate future hedonic consumption less positively
as temporal distance becomes smaller. We find that temporal distance
influences product evaluation when the product is framed as a hedonic option,
but not when it is framed as a utilitarian one (study 1). The effect of
temporal distance is mediated by anticipated guilt (study 2).
Vol.18/1 (2012, June)
Markov Model of Word-of-Mouth Effect and Stock Market Participation
Author KUAN-HUI LEE
Keywords Markov chain, Word-of-mouth, pleasure-in-talk, stock market participation
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The question of determinants of participation of stock market has long
been a central question to financial economists. Most notably, Hong, Kubik,
and Stein (2001) argue that social interactions affects the investment
decision of potential stock market investors through two popular channels:
word-of-mouth and pleasure-in-talk about stock market. In this paper, I
extend Hong et al.’s model of social interactions to incorporate different effects
of these two channels on stock market participation, conditioning on
current market situation. The idea is intuitive: When potential investors observe
current bull (bear) market, word-of-mouth and pleasure-in-talk effect
would work positively (negatively) toward stock market participation due to
increased number of peers who benefitted (lost their wealth) from bull (bear)
market situation. In Markov chain process framework, I model stock market
participation depending on current market situation and discuss empirical
implications of my model.
Seoul Journal of Business
ISSN 1226-9816 (Print)
ISSN 2713-6213 (Online)
ISSN 2713-6213 (Online)