Recent Issues

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.
Vol.18/1 (2012, June)
A Study on Global Orientation in New Product Development among Small and Medium-Sized Firms
Author INSIK JEONG,JOOYOUNG KWAK,DONG JIN LEE
Keywords Global orientation in new product development, Customer orientation; Long-term focus
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While many small and middle-sized enterprises are entering into emerging markets to satisfy diverse consumer needs, limited attention has been given to global orientation in new product development among these small and middle-sized enterprises in emerging markets. In order to find the antecedents and consequences of this managerial value, we have developed and tested a model of global orientation in new product development among small and middle-sized enterprises. Specifically, we hypothesize that customer orientation and long-term focus have a positive influence on the global orientation among small and middle-sized enterprises, which in turn has a positive effect on performance. Data collected from 482 firms supports the model. Theoretical and managerial implications are discussed.
Vol.18/1 (2012, June)
An Empirical Assessment of A-Share IPO Under-Pricing in China
Author CHAN-HYUN SOHN,ALBERT K TSUI,FENG ZHANG,ZHAOYONG ZHANG
Keywords Chinese stock market, A-share IPO, Under-pricing
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This paper investigates the under-pricing and long-run performance of 230 A-share IPOs issued in the Chinese markets using comparable firm multiples. We find that A-share IPOs are severely under-valued by issuers and underwriters at the offer, but over-valued by investors on the listing day. Both contribute to the severe under-pricing of IPOs in China. Our findings are robust across stock exchanges, classification of firms, criteria for choosing matching firms; absence of CSRC regulation and B-share market prices, respectively. The results also show that those over-valued IPOs by investors on the listing day under-perform those under-valued IPOs in the long-run.
Seoul Journal of Business
ISSN 1226-9816 (Print)
ISSN 2713-6213 (Online)