Hyoung Goo Kang

How Different Terrorist Attacks Affect Stock Markets

Terrorist attacks adversely affect the Pakistani stock market. However, such effect is short-lived: the market recovers from terrorist shocks in one day. The impact of attack depends on the locations and types of attack. The more severe the attack (i.e. more people killed), the more negative is the KSE-100 index return. Most interestingly, stock market contains information about future attacks. In sum, different tactics of terrorists have varied effects on financial markets, which in turn can predict terrorist attacks.

Multinational Affiliates and Local Financial Markets

We use data on the sources of debt finance of U.S. majority-owned foreign affiliates in 53 countries over the period 1983 to 2001 to examine the role of financial market development, and exposure to host country-specific risk on the financing choices of these affiliates. We find that total balance sheets are about four times as large as the cross-border component of foreign direct investment (FDI). The extent of financial leverage through local debt is positively related to host-country corporate tax rates, exchange rate variability, local currency-denominated sales, and financial development. Factors that further the role of local debt reduce that of parent company debt, and through this substitution overall leverage increases.

The effect of rain on the decision to visit a theme park.

Using the data obtained from a theme park, this study assesses the effect of rain on the behavior of theme-park visitors. The study proposes a new method for identifying the effects of weather by modeling theme-park consumer behavior based on a two-stage decision-making process. In the first stage, potential visitors make a decision to visit in advance based on weather forecasts; in the second stage, the visitors determine which pass to purchase based on the actual on-site weather conditions. The empirical results suggest that people visit the park less when it rains, but the likelihood of their visiting depends on the exposure to weather forecasts. Specifically, a rainy day on which rain was forecast brings significantly fewer visitors than a day on which no rain was forecast. However, the reduction in the number of visitors increases the likelihood that a visitor will purchase the more expensive unlimited day pass; smaller crowds make an unlimited day pass more appealing to those visitors who choose to attend. Based on these findings, this article illustrates how to develop more attractive tickets or pricing schemes. Importantly, rough weather can be a great opportunity for theme parks to identify and exploit the inherent preferences of visitors in order to enhance customer welfare and park profits.

From corporate social responsibility to creating shared value with suppliers through mutual firm foundation in the Korean bakery industry: a case study of the SPC Group

This study introduces the transformation process of a companys non-market strategy from corporate social responsibility to creating shared value (CSV). The proposed framework depicts supplier relationship management (SRM) activity, through the case of a Korean bakery franchise, using non-market strategies as a tool for SRM. The analysis explains the backgrounds of the transformation and the ramifications of the changes on SRM actions, such as mutual firm foundations, long-term contracts, and temporal relations. A mutual firm is suggested as the representative form of CSV activity within a triple helix innovation that would create business and social value, ultimately achieving regional resilience.

The Market for Corporate Social Responsibility (CSR): How Industry Structure Determines CSR

The effect of competition on firm performance and activities is at the core of strategy research; however, the question of how competition affects CSR remains largely understudied. This is partly due to endogeneity issues inherent in the question, and partly due to problems with existing data and methods. We overcome these limitations by triangulating traditional and non-traditional research methods in a specific empirical setting: addressing endogeneity issues not only with fixed effects and instrumental variables but also by calibrating market structure and strategic CSR in a simulation. Results of the more static regression analysis show that competition and CSR of competitors increase CSR at the firm level, while the more dynamic simulation analysis demonstrates that competition in fact decreases CSR at the industry level.

THE IMPACT OF TERRORISM ON FINANCIAL MARKETS: EVIDENCE FROM ASIA

This paper examines the impact of 410 terrorist attacks on the performance of five Asian stock markets. The empirical findings indicate that terrorism has a significant impact on the stock markets. Furthermore, the magnitude of these effects varies with respect to country, attack type, target type and severity of the attacks. In target type, terrorist attacks on business sector and security forces are particularly destructive for the stock markets. Likewise, in attack type, suicide attacks and bomb blasts particularly generate a significant downward movement in the stock markets. Furthermore, the more severe attacks have larger negative impact on market returns.

Complementarity in dietary supplements and foods: are supplement users vegetable eaters?

ABSTRACT Background: The consumption of fruits, vegetables, and dietary supplements correlate. Most previous studies have aimed to identify the determinants of supplement uses or the distinct features of supplement users; this literature lacks a discussion on dietary supplement consumption as a predictor of fruit and vegetable consumption. Objective: This study examines how dietary supplement consumption correlates with fruit and vegetable consumption by combining scanner data and surveys of Korean household grocery shopping. Methods: Propensity score matching (PSM) is used to identify the relationship between dietary supplement consumption and fruit and vegetable consumption in a household. A logit regression using supplement consumption as the dependent variable is used. Then, the supplement takers (the treatment group) are matched with non-takers (the control group) based on the propensity scores estimated in the logit regression. The fruit and vegetable consumption levels of the groups are then compared. Results: We found that dietary supplement use is associated with higher fruit and vegetable consumption. This supports the health consciousness hypothesis based on attention bias, availability heuristics, the focusing effect, and the consumption episode effect. It rejects the health substitute hypothesis based on economic substitutes and mental accounting. Conclusions: Future research on the health benefits of dietary supplements should address the complementary consumption of fruits/vegetables and their health benefits to avoid misstating the health effects of supplements.

What Constitutes Too-Big-To-Jail?

This paper investigates judicial size premium, the judicial bias in favor of large economic organizations. The Korean judiciary is biased with regard to chaebols (large family business groups). Convicted chaebol-related defendants receive 9.9%p more jail-sentence suspension and 19 month shorter jail term than non-chaebol counterparts do. The leniency remains robust after controlling for the quality of defense attorneys and other sentencing factors. We hypothesize that this bias occurs because (1) the judiciary worries that strict sentences against chaebols may cause system risk; and (2) the court follows the civil law tradition of being generous to in-group transactions. The results support both hypotheses. The larger the chaebol, the larger the judicial bias. Controlling for the in-group transactions explains much of the bias. With great victories in the court, chaebol-related offenders defend their wrongdoings, arguing that illegal in-group transactions are for the interest of entire business group, not for their private gain.

Build to Last, Discount, or Defer?: Examining Lotte’s Entry into the Beer Industry

This case represents the first part of a two-part case that analyzed the entry of LotteChilsung (“Lotte”) into the Korean beer industry. With regards to market structure, the market was characterized by a duopoly that was commanded by Oriental Brewery Co. (“OBC”) and HiteJinro (“HJ”). Lotte would be up against stiff competition should it go through with its intended plans to enter the beer industry.On the one hand, Lotte announced a two-step entry plan that began with a small plant. This case highlights the small plant as a real option since the two-step plan was not financially justifiable under classical NPV analysis. With the real option, Lotte could either expect to buy OBC or HJ at a much cheaper price, or wait for better timing to minimize potential losses from investment in a large plant while remaining a minor player in the beer market. Rather than highlighting a typical success or failure study, this case places participants in the driver’s seat of current events and asks them to critically analyze costs, benefits, and strategy.

Brand-size complementarity in the choice of retail stores

Shopping patterns of consumers vary as the level of size and brand of stores change jointly or separately. Brand and size can be either complementary or substitutable with respect to consumers’ shopping characteristics. They are complementary to spending per visit, or brand magnifies the positive effect of size to spending per visit. Weekend consumers also tend to view size and brand complementary, which is so strong that there exists polarized shopping at either large nationwide brand or small unbranded stores during weekend. Car owners exhibit very similar patterns as weekend consumers. On the other hand, substitutability exists to explain shopping frequency. This effect is so high as to generate the polarized pattern; shopping frequency is high with regard to small nationwide brand and large unbranded stores. Substitution patterns also arise for working women, people older than 50, and high-income consumers.