This paper examines how a firm’s access to different types of financing sources in capital markets affects its target leverage and the speed of adjustment to the target. Public equity (listed stock) and market-based debt (bond) are mainly taken into account as two main sources of capital of interest. Using a large data set of public and private firms in Korea, we classify the firms according to whether they have access to public equity (listed stock) and market-based debt (bond) in the capital markets. As the imbalance in number of observations and heterogeneity between public and private firms are substantial, we conduct empirical analyses with the matched sample as well as with the full sample. The findings of our paper show that different types of capital sources can have different implications on the firm’s target leverage, adjustment, and financing activities. A public firm tends to have lower leverage and adjusts to its target leverage faster than a private firm in Korea. A firm with access to bond market is shown to have higher leverage and adjusts faster to its target leverage than that without such access, regardless of whether the firms are public or private. Our paper also provides the findings that a public firm exercises more active issuance and retirement of capital than a private firm and that a firm with access to bond market, regardless of whether a firm is public or private, exercises more active issuance and retirement of capital than that without such access. This paper contributes to the literature on capital structure by integrating different types of capital sources in a single empirical framework and by providing new empirical findings based on the analysis of matched sample as well as full sample.
With rapid economic development and social progress, the service sector now accounts for an increasing proportion of the national economy. However, the available trade statistics appear to underestimate the sector’s contributions. From the perspective of trade in service intermediates, this study examines the export trade of manufactured goods of embodied service intermediates using Chinese input-output tables from 2007 to 2017. The study finds that direct service industry exports are relatively small, and that the contribution of services is principally represented by indirect, implicit exports of the manufacturing sector. While analyzing, it was observed that the scale of intermediate trade in services was significantly larger than that of direct trade. Based on industry, wholesale and retail sales, electric power, transportation, finance, business services, scientific research, and technical services accounted for a large proportion of trade in services as a whole.
This study examines multinational firms' profit shifting focusing on the role of intangible assets. Global firm level data is collected from the Orbis covering 9,932 parent firms and 179,459 subsidiaries for the period of 2012 to 2020. Our results confirm that profit of the multinational firms' affiliates is related to tax rate. Multinational firms' affiliate located in the countries with lower tax rate reports high profit. Moreover, multinational firms' affiliates located in lower tax rate turn out to have higher intangible assets. Profit shifting activity based on the tax difference become more significant for the group with high intangible assets.
We are interested in the behaviors of innovative manufacturing firms in choosing and implementing the organizational forms such as cooperative R&D. In this study, we examine the behavior of innovative firms regarding employment, R&D spending, or in-house or outsourcing(cooperation) by limited dependent variable model. We find the determinants of innovating firms for choosing the alternative methods of R&D: cooperative R&D, female employment, and specific department for R&D, etc. In special, R&D organization and firm size affect the magnitude of female employment. For the probability of product innovation, female employment is significant in the range of R&D spending more than $120 mil. We also examined the determinants of cooperative R&D. From the results, we can find that special R&D team(department) affects employment pattern significantly. We also considered sample selection issue. This study may help government in which public experts seeks to enhance the productivity level of firms.
This study investigates firm dynamics and productivity growth within IT manufacturing industry-specific features. The extensive business duration of vertically integrated with capital-share (VI) firms in their VI structure, despite agency costs, due to synergies from stable supply chains and lower transaction costs; new entrants in the industry and the structures; the strategic shifts that occurred in the non-VI (NVI) structure through selfselection, significantly contributed to productivity growth. The entry and exit impacts of VI firms in the industry and the structure were more pronounced than did NVI counterparts. TFP growth has been led mainly by technical progress and new entrants.
This study investigates how social distancing policy to curb the COVID-19 pandemic control affected the survival of stores in Korea. Using a Difference-in-Difference approach, we find that an increase in exit and a decrease in entry was more severe for stores in sectors and regions that faced stricter social distancing policy. In the district level analysis of Seoul, we find that high rent districts had a statistically significant drop in store entry while de facto mobility lessened a decrease in store exit. The results confirms that the vulnerability of stores and sectors is highly associated with social distancing and mobility.
This article attempts to offer a review of the modern consumer finance in South Korea. Exploring relevant regulatory changes, financial business transformations, and consumers’ financial behavior shows some major trends such as liberalization and universalization of consumer finance businesses, and increased access to formal financial products and services, yet partially actualized use of diverse financial instruments by consumers. Households’ savings and borrowings and their reported planned uses are also summarized. Other relevant aspects at the intersection of consumers and providers are also discussed based on the recent literature.
Psychological elements are increasingly being incorporated into standard theories in order to better understand actual human behaviors. In particular, in human financial decisionmakings, there are some biases, heuristics, and behavioral preferences, which tend to be commonly observed and can be better understood by exploring some psychological factors. In this article, I attempt to summarize some of the findings offered by the behavioral household finance literature.
We study a stock-based executive (CEO) compensation contract for the case where the insider receives a signal about the demand of liquidity traders in the stock market. The singleperiod model of Kyle (1985) is adopted for deriving the stock market equilibrium. Based on the equilibrium stock price, the optimal linear contract for executive compensation is obtained by applying a standard principal-agent model. Surprisingly, it is found that the firm’s liquidation value is not used in the optimal executive compensation contract in both our model and the benchmark model (where there is no signal about liquidity). We also make comparative statics for the equilibrium stock price and the optimal executive compensation contract with respect to exogenous parameters.
