Capital budgeting practices: evidence from Korea

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Taeyeon Kim ◽  
Hongbok Lee ◽  
Kwangwoo Park ◽  
Doug Waggle
Keyword(s):  
Best Practices ◽  
Capital Budgeting ◽  
Developed Countries ◽  
Financial Advisors ◽  
Cost Of Equity ◽  
Content Type ◽  
Capital Costs ◽  
Developed Markets ◽  
The Us ◽  
Ceo Age

PurposeThe authors present the results of a survey on how Korean firms evaluate new projects and estimate their capital costs. The authors report how Korean firms’ capital budgeting practices compare to other developed countries and to best practices in the field of finance.Design/methodology/approachThe authors survey CFOs of major Korean firms on their capital budgeting practices. The authors then compare the results against the US and European firms and best practices of leading firms and financial advisors.FindingsThe authors find that the capital budgeting practices of Korean firms are as strong as or stronger than firms in developed markets. A majority of Korean firms use best practices techniques such as NPV, IRR and the CAPM for project evaluation and cost of equity estimation. Chaebol affiliation results in somewhat stronger capital budgeting practices. The authors also find that other factors, such as company size, leverage, CEO age and CEO education, impact capital budgeting practices.Originality/valueThis paper is the first article that comprehensively examines Korean firms' capital budgeting practices.

The US crop insurance program and WTO disciplines

2016 ◽  
Vol 76 (1) ◽  
pp. 6-14 ◽  
Author(s):  
Joseph William Glauber
Keyword(s):  
Dispute Settlement ◽  
Crop Insurance ◽  
Developed Countries ◽  
Eligibility Criteria ◽  
Agricultural Insurance ◽  
Content Type ◽  
Insurance Program ◽  
The Us ◽  
Domestic Support ◽  
Green Box

Purpose – The purpose of this paper is to examine the US crop insurance programs in the context of domestic support disciplines under the World Trade Organization (WTO). Crop insurance has become an integral part of many domestic support programs, not just in developed countries, but in important emerging markets as well. An often-cited impetus for the growth in insurance program is the potential treatment of such programs as exempt from WTO reduction commitments. Design/methodology/approach – A detailed examination of the so-called “green box provisions” of the Uruguay Round Agreement on Agriculture is presented with particular emphasis on eligibility criteria for crop yield and revenue insurance programs. Findings – While WTO rules potentially shield green box policies from reduction, few developed countries have notified agricultural insurance policies under Annex 2. Moreover, crop insurance programs have been challenged in recent WTO dispute settlement cases and domestic countervailing duty investigations. Originality/value – The paper presents a unique perspective on a program which has become the largest single farm program in the USA.

Macroeconomic conditions are only an illusion, not the solution, to firm sustainability: unveiling the new dimension of stakeholder well-being

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zahid Irshad Younas ◽  
Mahvesh Khan ◽  
Mamdouh Abdulaziz Saleh Al-Faryan
Keyword(s):  
Well Being ◽  
Developed Countries ◽  
Macroeconomic Performance ◽  
Content Type ◽  
Macroeconomic Conditions ◽  
Us Economy ◽  
The Us ◽  
The Usa ◽  
Negative Impacts ◽  
The One

Purpose The purpose of the study is to explore the misconception that in developed countries, macroeconomic performance lead to sustainable firms or improves stakeholder well-being. The results may be the opposite or even worse. Design/methodology/approach This study examined this misconception using balanced panel data from 1,122 firms from different sectors of the US economy and data on macroeconomic performance from the World Bank. Findings The results of the one-step generalised method of moments indicate that most macroeconomic performance indicators had significant and negative impacts on firm sustainability and stakeholder well-being. Practical implications From a societal perspective, the results illustrate that the fruits of macroeconomic performance of the US economy do not reach stakeholders through firms’ sustainability. Thus, linking the economy’s macroeconomic performance with firm sustainability is vital for sustainably uplifting society and for stakeholder well-being. Originality/value From a policy perspective, this study reveals that the greater focus on macroeconomic performance in the USA over the past decades has resulted in lower firm sustainability because of the malfunctioning of social, economic, environmental and governance factors. This has negatively influenced stakeholder well-being in the country.

Virtual currency in sanctioned jurisdictions: stepping outside of SWIFT

2019 ◽  
Vol 20 (2) ◽  
pp. 39-44 ◽  
Author(s):  
Katherine Kirkpatrick ◽  
Christine Savage ◽  
Russell Johnston ◽  
Matthew Hanson
Keyword(s):  
Best Practices ◽  
Design Methodology ◽  
Virtual Currency ◽  
Content Type ◽  
The Us ◽  
Expert Analysis ◽  
Practical Implications ◽  
Foreign Assets

Purpose To understand and analyze sanctions evasion and enforcement via virtual currencies. Design/methodology/approach Discusses various jurisdictions’ attempts to further the use of virtual currency to facilitate and maximize access to international funds; analyzes the aspects that make virtual currency uniquely suited to evade sanctions; suggests best practices for industry participants to be sure to account for the differences in crypto asset structure and related risks. Findings The US Treasury Department’s Office of Foreign Assets Control (OFAC) has explicitly stated that despite virtual currency’s anonymity, industry participants are still responsible for policing and enforcing client compliance. Although sanctioned jurisdictions are thinking creatively about ways around SWIFT, the use of virtual currency to skirt sanctions presents certain challenges. Practical implications Virtual currency industry participants should understand OFAC’s specific guidance regarding compliance obligations in the cryptocurrency space, and should implement best practices and conservative measures to avoid unknowingly running afoul of sanctions laws. Originality/value Expert analysis and guidance from experienced investigations and sanctions lawyers.

Popular reporting: learning from the US experience

2019 ◽  
Vol 32 (1) ◽  
pp. 92-113 ◽  
Author(s):  
Francesca Manes-Rossi ◽  
Natalia Aversano ◽  
Paolo Tartaglia Polcini
Keyword(s):  
Content Analysis ◽  
Best Practices ◽  
Local Governments ◽  
Legitimacy Theory ◽  
Content Type ◽  
The Us ◽  
The Usa ◽  
The City ◽  
Qualitative Characteristics ◽  
Practical Implications

Purpose The purpose of this paper is to explore a citizen-centered tool for public accountability, the popular report (PR). Elaborating on previous studies and on content analysis of a sample of municipalities in the USA, this paper aims to identify the qualitative characteristics and content elements that PR should have to serve as a legitimation tool. Design/methodology/approach The study adopts a mixed methodology. After the analysis of previous studies on PR and best practices in US municipalities, a list of content elements and qualitative characteristics of PR is compared with results emerging from the content analysis of PR published by of a sample of municipalities in the USA. Findings The analysis reveals that the PR should embed information about the government’s sources of revenues and taxes, expenditures, cost of government services, liveability and governance of the city. Research limitations/implications The paper offers new knowledge on reporting centered on citizens, framing the analysis in the legitimacy theory. Even though the research relates only to the US context, the results may assist standard setters in preparing guidelines for local governments to communicate financial data to citizens and stimulate further research in other contexts. Practical implications The results may encourage local governments to prepare a PR suitable to discharge accountability and gain legitimation. Originality/value This study is the first to discuss the PR within a theoretical framework, in this case, legitimacy theory. Moreover, a further novelty lays in the analysis carried out on the PRs published by US municipalities in order to derive qualitative characteristics and content elements with which the PR should comply.

Corporate governance and cost of equity: empirical evidence from Latin American companies

2016 ◽  
Vol 16 (5) ◽  
pp. 831-848 ◽  
Author(s):  
Emanuele Teti ◽  
Alberto Dell’Acqua ◽  
Leonardo Etro ◽  
Francesca Resmini
Keyword(s):  
Corporate Governance ◽  
Latin American ◽  
Cost Of Capital ◽  
Negative Relationship ◽  
Developed Countries ◽  
Equity Capital ◽  
Cost Of Equity ◽  
Content Type ◽  
The Cost ◽  
The Relationship

Purpose This paper aims to investigate the extent to which corporate governance (CG) systems adopted by Latin American listed firms affect their cost of equity capital. Several studies on the link between the two aforementioned dimensions have been carried out, but none in the context of Latin American firms. Design/methodology/approach A CG index is created by taking into account the peculiarities of each country and the recommendations given by the corresponding CG institutes. In particular, to assess the level of CG quality, three sub-indexes have been identified: “Disclosure”, “Board of Directors” and “Shareholder Rights, Ownership and Control Structure”. Findings The results indicate a negative relationship between CG quality and the cost of equity. In particular, the “Disclosure” component is the one mostly affecting the cost of equity. Research limitations/implications This study contributes to the literature by adding knowledge on the relationship between CG and cost of capital considering, for the first time, the overall Latin American market. Practical implications The paper proves that institutional investors all over the world are disposed to pay a premium to invest in firms with effective CG standards; moreover, this premium is higher in emerging countries such as those analyzed in this paper, rather than in developed countries. Originality/value To the authors' knowledge, this is the first paper empirically investigating the relationship between CG and cost of capital in Latin America.

Legislation for building back better of horizontal infrastructure

2017 ◽  
Vol 26 (1) ◽  
pp. 94-104 ◽  
Author(s):  
Mark Bassett ◽  
Suzanne Wilkinson ◽  
Sandeeka Mannakkara
Keyword(s):  
Best Practices ◽  
Design Methodology ◽  
Similar Case ◽  
Recovery Process ◽  
Developed Countries ◽  
Valuable Contribution ◽  
Content Type ◽  
Study Approach ◽  
Post Disaster

Purpose The purpose of this paper is to determine how post-disaster legislation can be used to support building back better (BBB) in the horizontal infrastructure sector (roading, water, wastewater and stormwater networks). Design/methodology/approach A case study approach was taken looking at the rebuild following the Canterbury earthquakes in New Zealand. Data were collected through document analysis and semi-structured open-ended interviews with members of the organization responsible for implementing the horizontal infrastructure rebuild. Findings The results showed that the post-disaster legislative actions taken in Christchurch were comparable to existing findings on post-disaster legislative best practices in developed countries. This study confirmed that post-disaster legislation is an effective mechanism to support BBB through enforcing BBB concepts such as risk reduction and better implementation, and facilitating the recovery process to improve efficiency. Research limitations/implications It is recommended that this study is extended to conduct similar case studies in other countries to further explore legislative implications in different sectors as well as different legislative environments. Originality/value This paper makes a valuable contribution to existing research on how post-disaster legislation can be used to support BBB in the horizontal infrastructure sector. The findings also add to wider knowledge on the Canterbury earthquakes recovery process.

Banking system resilience: an empirical appraisal

2019 ◽  
Vol 46 (6) ◽  
pp. 1241-1257 ◽  
Author(s):  
Cristina Ruza ◽  
Marta de la Cuesta-González ◽  
Juandiego Paredes-Gazquez
Keyword(s):  
Best Practices ◽  
Relative Position ◽  
Banking System ◽  
Developed Countries ◽  
Theoretical Framework ◽  
Model Specification ◽  
Multiple Factor Analysis ◽  
Content Type ◽  
Banking Systems ◽  
Multiple Factor

Purpose The purpose of this paper is to empirically appraise the health of banking systems by applying a new theoretical framework based on resilience and stability simultaneously. In line with complex system theories, the authors will consider the dynamics of the banking system as a whole, analysing not only banks individually but also the broad environment in which they operate. For doing so, the authors propose a composite indicator (CI) for analysing the resilience and stability of banking systems of developed countries. The main purpose of the indicator is not to make predictions on future banks’ behaviour, but rather to use it as a tool for appraising the overall health of the most salient banking systems. Design/methodology/approach The authors have designed a theoretical framework of resilience and stability taking into account the review of previous literature. The authors have identified the main factors underlying these two concepts that can be appraised as complementary targets. The authors have applied multiple factor analyses to identify the main determinants of banks’ resilience and stability, and the authors have constructed a CI giving different weights to the relevant dimensions previously identified. The authors have tried different model specification and the authors have chosen the simplest model that render better empirical results. The authors construct the resilience and stability indicator for the group of G7 countries, Spain and Portugal, from 2004 up to 2015. Findings First, resilience–stability indicators for the group of countries analysed reveal quite different patterns in the aftermath of the financial crises. While some countries have improved its relative position within the ranking, the authors find others evolving just in the opposite direction. Second, the relative position of countries in terms of the resilience–stability indicator allows the authors to identify Canada and the USA as examples of best practices. Third, by analysing countries individually the authors will be better able to identify potential weakness and areas for improvement in each case. Practical implications The evolution of the resilience and stability indicator will serve as an early warning system for policy makers and supervisors in identifying signs of weakness, as well as a useful tool to identify the best practices. Furthermore, this indicator will allow to better assessing the potential vulnerability of banking systems in the advent of a forthcoming crisis. Therefore, this measurement should not be interpreted as an absolute value but as a warning signal of potential weakness in each case. Originality/value The main contribution of this paper to the existing literature is that it introduces a new reconceptualization of the health of the banking system in line with complex theories. The theoretical background is based on a comprehensive framework of resilience and stability as complementary targets. The CI summarises into a single figure a multidimensional concept like resilience and stability. The variables that the authors have used for the construction of the indicator have been validated by applying multiple factor analysis. The authors have empirically appraise the resilience and stability of a group of advanced economies that encompass the group of the more developed countries in the world and the two European cases that have receive financial support in order to see if there are remarkable differences.

A retrospect on the US apparel industry: expert predictions and reality data

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Doris H. Kincade ◽  
Kate E. Annett-Hitchcock
Keyword(s):  
Critical Time ◽  
Apparel Industry ◽  
Developed Countries ◽  
Primary Data ◽  
Steady Increase ◽  
Market Uncertainty ◽  
Content Type ◽  
The Us ◽  
The Usa ◽  
Southeast Us

Purpose In 1978, the once powerful US apparel industry was on the cusp of change, and the consulting firm KSA conducted a Delphi survey of apparel executives’ predictions into the 2000s. The purpose of this paper is to compare actual changes over the subsequent decades with these 1978 expert predictions and explore the accuracy/inaccuracy of these “educated guesses” (KSA, 1978, p. 1). Design/methodology/approach The chorographic method was used to analyze the report and document historical data. Chorography is “concerned with significance of place, regional characterization, [and] local history […]” (Rohl, 2012, p.1) and includes contextual settings and researcher input. Primary data were examined during each decade and included: industry literature, government documents and labor data. The researchers used content analysis to reduce and organize data. Findings Findings cover three decades of Southeast US apparel industry data including imports, employment, number of plants, size of plants and productivity. Predictions were inaccurate about imports, predicted to be minor in comparison with domestic production, which they actually surpassed. Predicted decrease in employment was similar to actual decrease but reasons were inaccurate. Change in number and size of plants were over-predicted and under-predicted. Reasons given by experts were automation and government intervention; in actuality, limited automation occurred with insignificant impact in contrast to outsourcing, which decimated employment in US plants. Steady increase in productivity was predicted when productivity often decreased. Originality/value Previous studies focus on the textile sector; studies of the apparel sector tend to be regional or topical. This study is more expansive and provides insight into predictions and changes made in the US apparel industry at a critical time in its near demise. With the current climate of global change and increased market uncertainty, insights from this study may provide direction for rethinking of the domestic apparel industry for the USA and other developed countries.

scholarly journals The impact of corporate governance on the cost of equity

2019 ◽  
Vol 4 (2) ◽  
pp. 293-314
Author(s):  
Syed Tauseef Ali ◽  
Zhen Yang ◽  
Zahid Sarwar ◽  
Farman Ali
Keyword(s):  
Corporate Governance ◽  
Agency Problem ◽  
Capital Budgeting ◽  
Coefficient Of Determination ◽  
Cost Of Equity ◽  
High Demand ◽  
Content Type ◽  
Wide Range ◽  
The Cost ◽  
The Impact

Purpose In view of organizational inertia, with the occurrence of a major event, though resource rigidity minimizes, however simultaneously, it increases process rigidity, which creates difficulties in motivating managers and dealing with the agency problem. Therefore, keeping in mind the high demand created by the China–Pakistan Economic Corridor and Naya Pakistan Housing Scheme in the cement sector of Pakistan, the purpose of this paper is to investigate the impact of corporate governance (CG) on the cost of equity (COE) in the cement sector, to deal with the problems surging during and after the completion of these projects and highlight further opportunities for the cement sector of Pakistan. Design/methodology/approach CG is a qualitative concept therefore, eight proxies have been used to measure it along with the two control variables. This study uses balance panel data of six years from 2012 to 2017, collected from 18 companies of the cement sector of Pakistan. Descriptive statistics have been used to describe the data, correlation matrix to see the nature of the relationship, and Pooled OLS as the estimation technique, while to analyze the data a statistical package 13 has been used. To measure the COE, the Capital Asset Pricing Model (CAPM) has been used. Findings Regression results suggest that block ownership, insider ownership and the board size are insignificant, while CEO tenure is negatively and significantly associated with the COE. Non-executive directors, independence and CEO duality are insignificant; however, diversity is positively and significantly associated with the COE. Moreover, the mean value of the COE is 8.22 percent for the cement sector, while the coefficient of determination of the model under study is 74 percent. Research limitations/implications This paper is based on the data from the cement sector of Pakistan only. Therefore, this is the reason that these results cannot be generalized on the whole economy of Pakistan. Practical implications This study helps in finding out the COE value specific to the cement sector, which will help this sector to evaluate the capital budgeting decision more precisely and accurately than before. Moreover, the association of diversity as positive, while independence as negative with the COE highlights a room for improvement in the implementation of CG codes by SECP. This study also helps to mitigate the impact of inertia, the after-effects of high demand, and managing the agency problem in the cement sector. Originality/value This is the first study using CG data collected just after the revised promulgation of CG codes in 2012, along with a wide range of eight proxies measuring CG and its impact on the COE in the cement sector.

Impacts of the US macroeconomic news on Asian stock markets

2014 ◽  
Vol 15 (2) ◽  
pp. 149-179 ◽  
Author(s):  
Tho Nguyen ◽  
Chau Ngo
Keyword(s):  
Labor Market ◽  
Emerging Markets ◽  
Stock Markets ◽  
Price Index ◽  
Market Returns ◽  
Macroeconomic News ◽  
Stock Market Returns ◽  
Content Type ◽  
Developed Markets ◽  
The Us

Purpose – This paper aims to investigate the spillover effect of 14 US key macroeconomic news on the first two moments of 12 Asian stock market returns. Design/methodology/approach – The authors collect market expectation and actual scheduled announcements data for 14 key US's macroeconomic announcements from January 2002 to April 2012 from Bloomberg. The dataset consists of six groups: monetary policy and general macroeconomic indicators: the Federal Reserve's target interest rates (FOMC), gross domestic product (GDP), and leading indicator (LI); price indicators: consumer price index (CPI) and producer price index (PPI); business indicator: housing starts (HS) and industrial production (IP); consumption indicators: retail sales (RS) and consumer confidence level (CONSUM); labor market indicators: non-farm payroll (NFP), unemployment level (UE), and jobless claim (JOB); and external sector indicators: current account (CA) and trade balance (TB). The authors also collect daily opening and closing data of 12 Asian stock markets. Following Dow Jones classification, the authors divide them into two groups: five developed markets (Japan, Hong Kong, Republic of Korea, Singapore and Taiwan), and seven emerging markets (China, India, Indonesia, Malaysia, Pakistan, Sri Lanka, and Thailand). The MA-EGARCH (1,1) model is used for the empirical test. Findings – First, the authors find that stronger than expected news from the USA is associated with higher conditional mean and lower conditional variance of the Asian stock market returns, in general. Second, the Asian stock markets tend to put more weight on information relating to the US labor market than the other news as this indicator reveals much information about the underlying health of the US economy since full employment is the most important mandate for the US administration and policy makers. Third, in responding to the US news, the Asian emerging markets seem to respond stronger to the US news than the Asian developed markets both in terms of the number of responses and the magnitude of the reaction. This suggests that this could be seen as evidence that emerging markets are more dependent on the information content of the US news than the developed markets. Fourth, the US news is absorbed gradually leading to persisting volatility responses in the Asian stock markets. Originality/value – The authors fill a gap in the extant literature in investigating the speeds of the news absorption across the Asia region by examining the spillover effects across three time horizons, namely daily, overnight and intraday.

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