Department of Accounting & Finance
Permanent URI for this collectionhttps://hdl.handle.net/11274/9565
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Browsing Department of Accounting & Finance by Author "Choi, Wonseok"
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Item Firm-level political risk and corporate investment(Elsevier, 2022) Choi, Wonseok; Chung, Chune Young; Wang, KainanExtant literature shows that firms reduce their capital investment in response to political risk. We examine firm-level activities and characteristics that mitigate the impact of political risk on firm investment. First, we empirically investigate the relationship between firm-level political risk and future investment, showing that firms with higher political exposure and political risk spend less on capital investment. Next, we examine the mechanisms behind the negative relationship between firm-level political risk and corporate investment. We find that political lobbying effectively reduces the negative impact of political exposure and political risk on corporate investment. In addition to corroborating the key findings documented in the literature that firms react to political risk by cutting investment, we show that this relationship is affected by certain firm activities and characteristics.Item How do heterogeneous institutional investors influence corporate advertising decisions?(Elsevier, 2022) Kang, Sanggyu; Chung, Chune Young; Choi, WonseokMarketing increases firm value; therefore, it is imperative to determine the factors affecting corporate marketing decision processes. Considering that the current understanding of these factors is limited, this study examines institutional investors’ effects on Korean firms’ marketing decisions by focusing on advertising spending. We present evidence that institutional investors may play a significant role in such decisions. Further, our results indicate that domestic institutional investors negatively influence advertising spending. In contrast, foreign institutional investors positively impact advertising spending regardless of their investment horizon. These results highlight the influence of external institutions’ characteristics in firms’ marketing decision processes.Item Independent directors’ dissensions and firm value(Elsevier, 2021) Choi, Wonseok; Rabarison, Monika K.; Wang, BinUsing a novel dataset of independent directors’ voting activities on items proposed by managers of Korean firms, we investigate whether independent directors’ dissension in board meetings plays an effective role in enhancing firm value through improved corporate governance. Our results indicate that dissension improves firm value. This finding is robust to different measures of firm value and alternative model specifications including subsample, propensity score matching, and instrumental variable analyses. Overall, we contribute to the understanding of the relation between corporate governance and firm value. Specifically, we provide new evidence that the monitoring by independent directors enhances firm value.Item Local investor attention and post-earnings announcement drift(Springer, 2017-09-18) Choi, Wonseok; Wang, Bin; Ibrahim, SirajWe show that local investor attention, as a proxy for the arrival rate of informed trading, has an impact on post-earnings announcement drift. Measured by monthly abnormal Google search volume before the earnings announcement, high (low) local investor attention is associated with weak (strong) delayed market reaction to the earnings announcement and strong (weak) abnormal trading volume in the pre-earnings announcement period. The evidence documented in this paper supports both ‘‘rational structural uncertainty’’ and attention allocation theories that argue that information distribution among investors plays an important role in explaining market anomalies.Item Managerial over-optimism and agency costs of debt: Evidence from high-tech IPO firms in Korea(Taylor & Francis, 2021-01-15) Choi, Wonseok; Chune, Young Chung; Kim, Kyung Soon; https://orcid.org/0000-0003-3215-8091We examine whether the combination of agency costs of debt and managerial optimism in high-tech IPOs creates inefficient R&D investment, thus undermining corporate value. We find that high-tech IPO firms with a high debt ratio exhibit a positive relationship between discretionary and future R&D expenses at the IPO point. We also find a negative relationship between discretionary R&D expenses and the long-term cumulative abnormal return. Furthermore, managerial optimism and agency costs of debt can increase during an IPO, reducing future value. Thus, a stock return decrease after an IPO may be influenced by management’s psychological errors and shareholders’ preferences for risky investments.Item Market efficiency in foreign exchange market(Elsevier, 2021) Lee, Namhoon; Choi, Wonseok; Yuntaek, PaeThe study examines foreign exchange market overreaction for various combinations of formation and testing periods over 30 years. First, we find that reversal is significant for longer test periods and longer formation periods. Second, we find no evidence of persistent momentum or reversal during the entire sample period. Thus, the results of overreaction studies should be sensitive to the sample period. Third, we observe losers outperform most of the formation and test periods combinations except for the short-term when spot rates are used to construct portfolios. We observe the evidence of overreaction becomes stronger with the longer formation and test period.Item Pension fund monitoring and corporate debt policy: Evidence from the Korean market*(Wiley, 2021) Choi, Wonseok; Chung, Chune Young; Park, JongchanWe investigate whether the Korean National Pension Service, a corporate watchdog and major long-term investor in South Korea, positively affects corporate financial policy. The Korean National Pension Service is less likely to influence corporate financial policy even among firms with high uncertainty and information opacity, which increases the importance of large shareholders’ monitoring role. Additionally, ownership by the Korean National Pension Service has statistically insignificant effects on firms’ performance and financial soundness.Item Reassurance or reason for concern: Security forces as a crisis management strategy(Elsevier, 2016-10) Choi, Wonseok; Cruz-Milan, Oliver; Simpson, Joseph; Simpson, PennyThis paper examines effects of the deployment of security forces to a popular winter migrant destination faced with a unique humanitarian crisis situation. The study surveyed past winter migrants to the region to evaluate their perceptions regarding sociocultural, economic, and psychological impacts of security forces deployed to the region. In addition, this study evaluates the deployment's impact on satisfaction with life in the region, return intention and likelihood of recommending the region to others to find that perceived safety from the security forces significantly affected community factors and that satisfaction with life fully mediated community factor effects on destination loyalty. These finding significantly add to the limited research in crisis management response effects and substantiates the use of signaling and signal crimes perspective in managing crises.Item Related party transactions and corporate environmental responsibility(Elsevier, 2022-05) Choi, Wonseok; Chung, Chune Young; Rabarison, Monika K.; Wang, KainanWe examine the effect of related party transactions on corporate environmental responsibility and find that firms with more related party transactions tend to have more controversial environmental reports, less emissions reduction, and less environmental expenditures. This relationship is more significant for firms with a high investment-cash flow sensitivity and those with a low ESG score. Overall, the results corroborate the hypothesis that the marginal costs of corporate environmental responsibility outweigh the benefits for financially constrained firms, thus deterring these firms from engaging in corporate environmental responsibility activities.