We identify and horse race three causes for the underperformance of some asset pricing models: investor irrationality, transaction costs, and missing risk factors. Specifically, we regress the difference of realized over expected returns (pricing error) per various asset pricing models onto proxies for the reasons for explanatory breakdown. First, for the capital asset pricing model (CAPM) and six other models we find that both investor irrationality and transaction costs are significantly related to the pricing error controlling for firm size and valuation. Second, models with more risk factors than the CAPM cannot overcome the shortcoming of the CAPM due to investor irrationality and transaction costs. In conclusion, transaction costs and investor irrationality are shown to be impediments to enhancing

Previous studies have been interested in how to maximize both the efficiency and the effectiveness of organizational learning. On the flipside, some studies have investigated the critical barriers to learning. We suggest organizational hierarchy as another cause and theoretically explore how it can deter learning performance. Specifically, we argue that the configuration of structure determines a prevalent form of learning method in an organization to consequently affect its learning performance. Using simulation modeling, we show that non-hierarchical organizations may be a better learning environment than hierarchical organizations. We also show that the contextual factors, such as problem complexity and member regrouping, may affect the base-line result. This study subsequently calls for further attention be paid to the key issues concerning the hierarchy and organization learning performance.

Researchers have identified emotional intelligence (EI) as an important individual characteristic that predicts interpersonal effectiveness. In this study, we identified three potential areas of emotion management (emotion expression, emotion recognition, and shaping counterpart emotion) that may be promoted by intrapersonal and interpersonal EI, and may mediate the effects of EI on interpersonal process and outcomes. Our analysis of data from a dyadic negotiation simulation indicates that EI predicts one aspect of emotion management (shaping counterpart emotion). Intrapersonal EI (but not interpersonal EI) increased counterpart positive emotion and decreased counterpart negative emotion during the negotiation simulation. Nevertheless, the overall relationship between EI and emotion management was weak. The present study highlighted the need for clearly conceptualizing and investigating emotional management through which individuals accrue interpersonal and performance benefits.

This study examines the relationship between the ownership of controlling shareholders and corporate social responsibility in Korea under external financial constraints. Empirical results show that a negative relationship is observed only in firms with fewer external financial constraints, while it is weaker or disappears for firms with more financial constraints. We obtain similar results when we use the level of environmental management as a proxy for corporate social responsibility. These results confirm that external financial constraints act as a monitoring mechanism and mitigate the agency problem of controlling shareholders.

Industry fluctuations in the supply of DRAM chips relative to demand have been characterized by what is called “the silicon cycle.” In the period between 2006 and 2008, the DRAM industry experienced an unusually sharp transition from a shortage of DRAM products to an extreme oversupply, culminating with the crash of DRAM prices in 2008. The industry’s overcapacity was preceded by a mad race to expand capacity; this race has been dubbed as the “chicken game” in the media. Even in the time of plunging DRAM prices, players preferred not to reduce their output. The amplified industry cycle accelerated the exit of financially vulnerable firms. I argue that the combination of the amplification of cycle and rising entry barriers fosters the transition of an industry to an oligopoly, in which cyclicality is curbed and the positions of market leaders are solidified.

This paper investigates the cost behavior in the Korean defense industry. Managers in the defense industry tend to have motivation to manage earnings because the costs incurring in the production process of defense articles are reimbursed based on cost plus contracts. Results are as follows. First, in the sample of the defense sector, SG&A costs and total manufacturing costs exhibited anti-stickiness whereas labor costs exhibited cost stickiness. Other cost components displayed symmetric cost behavior. Next, in the commercial sector, material costs, direct material costs, total manufacturing costs, cost of goods sold, and total costs exhibited antistickiness. Labor costs showed cost stickiness whereas SG&A costs, overhead costs, and indirect production costs had symmetric cost behavior. Overall, the results reveals that the change rate of labor costs of the defense sector exhibits more cost stickiness to changes in sales than the commercial sector.

The purpose of this study is to examine how leader’s humor styles influence employee creativity, and the moderating effects of trust in leader on the relationships between leader’s humor styles and employees’ creativity. The results using 316 valid leader-subordinates pairs (71 leaders and 316 subordinates) from five telecommunication companies in South Korea showed that leader’s self-enhancing humor was positively associated with subordinates’ individual creativity, and leaders’ aggressive humor was negatively associated with subordinates’ individual creativity. In addition, trust in leader significantly moderated the relationship between selfenhancing humor and employee creativity. Specifically, the relationship between self-enhancing humor and employee creativity became stronger as trust in leader increased.

In 2008, a Korean online fashion distributor, Accommate, is founded in China and it tapped into the Chinese online market with the alliance of Taobao, online C2C(consumer-to-consumer) commerce platform of Alibaba. Taobao offered free listings to attract more sellers in order to compete e-bay and introduced keyword search features which Accommate made use of as an early adopter and partner. As Taobao became China’s market leader, Accommate secured the partner position to distribute Korean apparels and strengthened its partnership with Alibaba. Soon Alibaba introduced a new online brand mall called Taobao Mall or Tmall to complement the C2C platform. Accommate extended its business with Alibaba by taking charge of the Korean product sections in the online brand mall of Tmall. From the perspective of scales, China represented for Accommate a dynamic and fast-growing market, though it is so competitive. Moreover, it is a tough job to manage the adequate level of inventory for clothes which have as short lifecycle as 45 days. A number of Korean predecessors failed to manage cash flow issues resulted from the inventory. Accommate came to encounter the management issues of both meeting the changing requirement of Chinese customers and managing the inventory level at the same time. Considering these changes and challenges, we may well think what the strategic and operational issues regarding Accommate are and how the company should grow in this fast growing electronic marketplace. This case study will help readers think about the emerging electronic market in China and form an opinion on the associated management issues and analyses.

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This study investigates catch-up in the form of knowledge creation of firms in emerging markets by stressing two distinct types of search behaviors of an organization – horizontal search and vertical search. Based on an empirical analysis of 204 Chinese firms, this study provides new theoretical insights into and practical implications by emphasizing that in order to catch-up, firms in emerging markets should adopt idiosyncratic search strategies different from those of firms in more advanced countries. The regression results show that due to their under-developed absorptive capacity, firms in emerging markets should avoid searching in diverse knowledge fields, as established large firms in advanced countries are encouraged to do, in order to innovate successfully. Our findings also suggest that searching for recent and emerging knowledge helps firms in emerging markets overcome their learning curve disadvantage in the process of catch-up.