This paper aims to develop hedging strategies using both futures and forward contracts and issuing risky debt when financially constrained firms are forced to operate in long…
Abstract
Purpose
This paper aims to develop hedging strategies using both futures and forward contracts and issuing risky debt when financially constrained firms are forced to operate in long horizon.
Design/methodology/approach
The authors present a model for developing hedging strategies using both futures and forward contracts and issuing risky debt. A theoretical model employing stochastic differential equations for forward hedging is illustrated with a numerical example over parameter values consistent with the literature.
Findings
A financially constrained firm with limited cash balance must hedge its liquidity with both future and forward contracts and issue risky debt to support its long-term operations. The firm can issue a minimal amount of risky debt by adding forward contracts into hedging and can increase its value higher than that when hedging with only futures contracts. We show numerically that hedging with both futures and forward contracts allows the firm to issue minimal risky debt in increasing its firm value.
Practical implications
When Metallgesellschaft nearly collapsed in 1993, it offered long-term forward contracts to its customers and attempted to hedge its risk by rolling over series of short-term futures contract. It created the situation of inherent mismatch in maturity structure. A financially constrained firm operating in a long horizon appears to commit its liquidity as long-term forward contracts, which cannot be fully hedged with series of futures contacts. The firm should hedge its liquidity with both futures and forward contracts and avoid liquidation with deadweight costs in its long-term operation.
Originality/value
This is the first study examining hedging strategies with both futures and forward contracts.
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Unyong (Howard) Pyo and Yong Jae Shin
This study aims to focus on the profitability of momentum trading in the Korean stock market. More specifically, it aims to conduct an examination of the relationship between…
Abstract
Purpose
This study aims to focus on the profitability of momentum trading in the Korean stock market. More specifically, it aims to conduct an examination of the relationship between momentum returns and idiosyncratic volatility (IVol) to determine whether momentum profits can be explained by IVol.
Design/methodology/approach
Portfolios are formed based on their past performance and examine the momentum, or contrarian returns, as the difference between winning and losing portfolios. To confirm that the momentum strategy provides excess returns, the relationship between momentum returns and IVol is studied. The Fama and French three‐factor model is also examined to see whether systematic risk affects momentum profits. Firm size, stock price, and turnover are controlled to determine robustness. Finally, a time‐series relationship between aggregate IVol and momentum profits is investigated.
Findings
The paper illustrates that excess returns are obtained from a momentum strategy, not a contrarian strategy, in the Korean stock market. Momentum returns are higher among high IVol stocks, especially high IVol winners. Examining the Fama and French three‐factor model, it is found that momentum returns cannot be explained by systematic risk. The findings are robust after controlling for factors such as firm size, book‐to‐market ratio, and turnover. The paper confirms the effect of IVol on momentum returns by illustrating that a time‐series relationship between momentum returns and aggregate IVol is positive.
Originality/value
This paper is among the first, to the authors' knowledge, to examine the relationship between momentum profits and IVol in the Korean stock market, one of the mature financial markets. The findings in this study can be applied to better understand the sources of gains from the momentum strategy in international stock markets.
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Yongjae Kim, Kitae Yim and Yong Jae Ko
This study develops and tests a theoretical research model delineating the relationships between consumers' patriotism and their response to patriotic advertising and the…
Abstract
This study develops and tests a theoretical research model delineating the relationships between consumers' patriotism and their response to patriotic advertising and the advertised brand, and examines if the research model has the same pattern across different sporting events. Structural Equation Modeling is employed to test the model by using data collected from three different sporting event contexts. The results provide empirical evidence of the positive influence of consumers' patriotism on attitudes towards patriotic advertising and brands in sporting event contexts. A direct effect of patriotism on sports event involvement is found in international mega-sporting events but not in a domestic (or national) sporting event.
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South Korea's conglomerates are symbols of national pride and jobs with them are highly sought after, but their faults are roundly criticised. Samsung, the largest, is widely…
Details
DOI: 10.1108/OXAN-DB258019
ISSN: 2633-304X
Keywords
Geographic
Topical
Seong-Gyu Jeon and Yong Jin Kim
The weapon system of The Navy is the small quantity producing system on multiple kinds. It is consisted of various equipment and the subordinate parts of those which can repair…
Abstract
The weapon system of The Navy is the small quantity producing system on multiple kinds. It is consisted of various equipment and the subordinate parts of those which can repair the damaged part. The operating procedure concerning warship's repair parts managed under these systems is as follows. Firstly, if demand of repair parts occurs from warship which is the operating unit of weapon, then the Fleet(the repair & supply support battalion) is in charge of dealing with these requests. If certain request from warship is beyond the battalion's capability, it is delivered directly to the Logistic Command. In short, the repair and supply support system of repair parts can be described as the multi-level support system. The various theoretical researches on inventory management of Navy's repair parts and simulation study that reflects reality in detail have been carried out simultaneously. However, the majority of existing research has been conducted on aircraft and tank's repairable items, in that, the studies is woefully deficient in the area concerning Navy's inventory management. For that reason, this paper firstly constructs the model of consumable items that is frequently damaged reflecting characteristics of navy's repair parts inventory management using ARENA simulation. After that, this paper is trying to propose methodology to analyze optimal inventory level of each supply unit through OptQuest, the optimization program of ARENA simulation.
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Yong-Ki Lee, Paresha N. Sinha, Soon-Ho Kim, Eric Melvin Swanson, Jae-Jang Yang and Eun-Jung Kim
Hotels conducting international business are acknowledging the importance of an expatriate general manager (GM), to increase the effectiveness of their knowledge management system…
Abstract
Purpose
Hotels conducting international business are acknowledging the importance of an expatriate general manager (GM), to increase the effectiveness of their knowledge management system through the sharing of knowledge between expatriates and local employees. In the aspect of comparative leadership studies, this study attempts to compare and analyze the effects of knowledge sharing (KS) efforts, which are competencies of expatriate GMs and local GMs, on employee trust, organizational KS and employee loyalty.
Design/methodology/approach
Data were collected from employees of 7 hotels managed by expatriate GMs among 16 franchising luxury (5-star) hotels, and from employees of 6 hotels operated by local GMs among 9 local luxury hotels located in Korea. Structural equation modeling method using SmartPLS 3.3.3 was used to analyze the data.
Findings
Expatriate GM’s two-way KS influences affective trust but does not influence cognitive trust. Affective trust influences cognitive and organizational KS but does not influence employee loyalty. Cognitive trust does not influence organizational KS but influences employee loyalty. Finally, organizational KS significantly affects employee loyalty. In addition, in the analysis comparing the estimates between expatriate and local GM group, significant differences in groups were found for the impact of GM’s two-way KS on cognitive trust, for the impact of affective trust on organizational KS, for the impact of affective trust on employee loyalty and for the impact of cognitive trust on organizational KS.
Practical implications
This study shows that knowledge management designs need to consider different effects of expatriate GMs’ and local GMs’ capabilities on employee attitudes and behavior considering cultural impacts. Expatriate GMs will greatly benefit their effort for KS by assuring employees that they are attentive to their needs, interests and problems.
Originality/value
This study not only contributes to the existing social capital theory but also provides managerial implications for human resources management in the hospitality field through a comparative study of KS efforts of expatriate and local GMs.
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Meanwhile, Kim Yong-hyun has become the first sitting South Korean defence minister publicly to voice support for nuclear weapons acquisition. Both sides have engaged in bellicose…
Details
DOI: 10.1108/OXAN-DB289747
ISSN: 2633-304X
Keywords
Geographic
Topical
Following recent lapses, President Yoon Suk-yeol has reshuffled his top security team. Separately, North Korea has allegedly hacked details of two South Korean spy planes…
Details
DOI: 10.1108/OXAN-DB289381
ISSN: 2633-304X
Keywords
Geographic
Topical
Young Yoon Choi, Hun-Koo Ha and Minions Park
The maritime freight transportation industry has played an important role in the Korean economy. The Korean maritime freight transportation industry is faced with a period of…
Abstract
The maritime freight transportation industry has played an important role in the Korean economy. The Korean maritime freight transportation industry is faced with a period of transforming it competitively and efficiently in this global age. This paper, therefore, aims to identify the impact of the maritime freight transportation industry in the Korean national economy. Hence, this paper provides policy-makers with accessible and reliable information regarding the role of the Korean maritime freight transportation industry. This study employs input-output (I-O) analysis to examine the role of the maritime freight transportation industry in the national economy for the period 1995-2003, with specific application to Korea. This study pays particular attention to the maritime freight transportation industry by taking the industry as exogenous variable and then investigates its economic impacts. We identify inter-industry linkage effects in 20 sectors, production-inducing effects, added value-inducing effects, and supply-shortage effects of the maritime freight transportation industry.