Shin, Mi-Young; Jeong, Kyunbeom
A icle
The e ec o b and asse s on i m alue and c edi a ings
– E idence om Ko ea
Cogen Business & Managemen
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The effec o b and asse s on fi m alue and
c edi a ings – E idence om Ko ea
Mi-Young Shin & Kyunbeom Jeong
To ci e his a icle: Mi-Young Shin & Kyunbeom Jeong (2024) The effec o b and asse s on
fi m alue and c edi a ings – E idence om Ko ea, Cogen Business & Managemen , 11:1,
2380356, DOI: 10.1080/23311975.2024.2380356
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2024, VoL. 11, no. 1, 2380356
The e ec o b and asse s on i m alue and c edi a ings –
E idence om Ko ea
Mi-Young shin and Kyunbeom Jeong
school o Business adminis a ion, Hansung uni e si y, seoul, Ko ea
ABSTRACT
his s udy aims o empi ically analyze he impac o b and asse s, a company’s co e
compe ency, on i m alue and c edi a ings using companies lis ed on he Kospi and
KosDAQ om 2011 o 2019. We also in es iga e he mode a ing e ec o a i m’s li e
cycle on he impac o b and asse s on i m alue and c edi a ings by di iding he li e
cycle in o g ow h, ma u i y, and decline s ages, acco ding o he economic cha ac e is ics
and de elopmen p ocess o he company. he esul s show ha b and asse s ha e a
posi i e impac on i m alue and c edi a ings and ha he impac o b and asse s on
i m alue and c edi a ings is g ea e o i ms in he g ow h s age han o i ms in
o he s ages. ou indings on he e ec s o b and asse s on i m alue in he capi al
ma ke and c edi a ings in he bond ma ke sugges ha he e is a need o b oade
ecogni ion o b and asse s as a sou ce o u u e ea nings and alue c ea ion, and a
ede ini ion o inancial epo ing s anda ds.
1. In oduc ion
B and asse s a e ecognized as co e compe encies o he sus ainable managemen o companies and
in angible asse s ha c ea e alue as an impo an componen o a company.
in e b and, a global b and consul ing g oup, selec s he op 100 bes global b ands annually and
announces b and alua ion and anking. he 2020 Bes global 100 B ands included Apple ($322,999
million), Amazon ($200,667 million), Mic oso ($166,001 million), google ($165,444 million), and samsung
elec onics ($62,289 million). o he Ko ean companies included hyundai Mo o ($14,295 million) and Kia
Mo o s ($5,830 million).
compa ing he book alue o in angible asse s wi h he b and alua ion p o ided by in e b and Ko ea,
he a io o book alue o b and alue o Ko ean companies anked among he op 100 global b ands
was 10.3% o samsung elec onics, 28.6% o hyundai Mo o s, and 35.5% o Kia Mo o s. his means
ha book alue is signi ican ly lowe han b and alue, which is con a y o he o iginal pu pose o
inancial s a emen s o p o ide ex e nal in o ma ion use s wi h use ul in o ma ion o in es men
decision-making. his is due o he ac ha b and asse s a e buil h ough ad e ising and &D expenses,
which unde cu en accoun ing s anda ds end o unde es ima e he alue o in angible asse s because
hey a e no p ope ly ecognized in inancial s a emen s. lee (2001) a gued ha he book alue o in an-
gible asse s eco ded in he balance shee has less explana o y powe o i m alue han he book alue
o o he asse s and liabili ies, such as angible asse s. Among he expense i ems shown in he income
s a emen , &D and ad e ising expenses ha e been analyzed o hei ele ance o i m alue in many
s udies as in angible expendi u es.
o he s udies also ind ha b and asse s a e signi ican ly and posi i ely ela ed o he capi al ma ke
and posi i ely ela ed o ad e ising expendi u es (Ba h e al., 1998). on he o he hand, Ande son and
© 2024 he au ho (s). Published by in o ma uK Limi ed, ading as aylo & F ancis g oup
CONTACT Kyunbeom Jeong [email p o ec ed] school o Business adminis a ion, Hansung uni e si y, 116, samseongyo- o
16-gil, seongbuk-gu, seoul 02876, Ko ea.
h ps://doi.o g/10.1080/23311975.2024.2380356
his is an open access a icle dis ibu ed unde he e ms o he C ea i e Commons a ibu ion License (h p://c ea i ecommons.o g/licenses/by/4.0/), which
pe mi s un es ic ed use, dis ibu ion, and ep oduc ion in any medium, p o ided he o iginal wo k is p ope ly ci ed. he e ms on which his a icle has been
published allow he pos ing o he accep ed Manusc ip in a eposi o y by he au ho (s) o wi h hei consen .
ARTICLE HISTORY
ecei ed 7 Feb ua y 2024
e ised 17 May 2024
Accep ed 1 July 2024
KEYWORDS
B and asse s; i m alue;
c edi a ings; i m li e
cycle
REVIEWING EDITOR
sand a Al es, highe
ins i u e o Accoun ing
and Adminis a ion,
uni e si y o A ei o,
po ugal
SUBJECTS
Business, Managemen
and Accoun ing;
economics; Finance
2 M.-Y. shin e Al.
Mansi (2009) use bond ma ke a ings as a p oxy o i m alue pe o mance and ind a signi ican pos-
i i e ela ionship be ween Acsi, a u.s. cus ome sa is ac ion index, c edi a ings, and bond sp eads. Jeon
e al. (2012) also ound ha he Ko ean cus ome sa is ac ion index (Kcsi) has a signi ican posi i e
e ec on c edi a ings.
he e o e, his s udy in es iga es whe he b and asse s, which a e a company’s co e compe encies,
ha e a posi i e impac on i m alue and c edi a ing. Addi ionally, by ca ego izing he i m li e cycle
in o g ow h, ma u i y, and decline s ages acco ding o he economic cha ac e is ics o he company, his
s udy con i ms ha he impac o b and asse s on i m alue and c edi a ing di e s depending on he
i m’s li e cycle by es ablishing app op ia e managemen s a egies.
he con ibu ions o his s udy a e as ollows. Fi s , i is he i s empi ical analysis o he impac o
b and asse s on c edi a ings in he bond ma ke . i is expec ed ha he e will be much esea ch on
he ele ance o c edi a ings, which a e used as impo an indica o s in he bond ma ke , using a ious
measu es o b and asse s. second, his s udy analyzes, o he i s ime, he impac o b and asse s on
i m alue and c edi wo hiness by di iding he li e cycle in o g ow h, ma u i y, and decline s ages
acco ding o he de elopmen p ocess o a company. his could s imula e u he esea ch on he impac
o b and asse s on he alue and c edi a ings o i ms in di e en con ex s. on he o he hand, p e ious
s udies on he impac o b and asse s on inancial pe o mance and i m alue ha e used he Ko ea
B and powe index (K-Bpi) announced by he Ko ea pe o mance Associa ion consul ing as a measu e o
b and asse s. hese K-Bpis we e based on he op h ee b ands in each indus y; he e o e, he sample
size was limi ed, limi ing hei gene alizabili y. he e o e, his s udy uses he B and s ock op index (Bs i),
a b and alua ion index ha combines he B and s ock index gene a ed by he B and s ock exchange
and he consume su ey index calcula ed by su eying consume s na ionwide, as a measu e o b and
asse s o se e al b ands dis ibu ed in Ko ea. he inclusion o non-b anded companies in he s udy
complemen s he limi ed ep esen a i eness o p e ious s udies and inc eases he alidi y o he indings
h ough gene alized alida ion. his is one o he con ibu ions o his s udy.
he emainde o his pape is o ganized as ollows. he esea ch backg ound and p io s udies we e
e iewed, and esea ch hypo heses we e es ablished in sec ion 2. sec ion 3 explains he esea ch model
used o in es iga e he esea ch hypo heses, and desc ibes he sample selec ion o empi ical analysis.
sec ion 4 p esen s he esul s o he empi ical analysis o he hypo heses. sec ion 5 summa izes he
esea ch esul s and p esen s he implica ions and limi a ions o he s udy.
2. Resea ch backg ound and hypo hesis
2.1. The ela ionship be ween b and asse s and i m alue. esea ch has been conduc ed on he impac
o b and asse s, including s ock p ices and s ock e u ns, on i m alue. in a s udy on he ela ionship
be ween b and asse s and i m alue, simon and sulli an (1993) conside ed b and asse s as an inc ease
in cash in lows due o he owne ship o a p oduc ’s b and and analyzed he ela ionship be ween
in angible asse s and b and alue o us-lis ed i ms using b and alua ions published by in e b and
om 1984 o 1986. he analysis shows ha he posi i e alue ele ance be ween b and asse s and
in angible asse s is highe o consume p oduc s such as ood, be e ages, obacco, and clo hing,
whe eas he alue ele ance is lowe o in e media e p oduc s such as pape , pe oleum e ining, s eel,
p ima y me als, and base me als. Ba h e al. (1998) ound a signi ican posi i e ela ionship be ween
b and asse s, s ock p ices, and excess e u ns using 1,204 b and alua ions published by in e b and o
595 us-lis ed companies om 1991 o 1996. hey also ind ha b and asse s explain mo e a ia ion in
s ock e u ns, which ep esen s he ma ke alue o capi al inc ease, han ope a ing income. in a p e ious
s udy on b and asse s using Ko ean da a, pa k (2002) analyzed he ela ionship be ween b and asse s
and i m alue using he model o simon and sulli an (1993). he empi ical esul s sugges ha b and
asse s a e posi i ely ela ed o excess e u n and ma ke alue. using he K-Bpi as a measu e o b and
asse , Kim e al. (2019) ound ha b and asse s we e posi i ely ela ed o i ms’ ea nings and i m alue
in a s udy o Ko ean lis ed i ms om 2010 o 2016. his b and asse is he p o i o a good b and name
ha adds alue o he p oduc (Wells e al., 1992), which is he inc emen al p o i acc ued in he u u e
owing o he p esence o he b and (simon & sulli an, 1993). i has also been sugges ed ha b anded
p oduc s ha e he po en ial o p o ide i ms wi h highe ope a ing p o i s han unb anded p oduc s
(Kelle , 1993).
cogen Business & MAnAgeMen 3
B and asse s a e expec ed o ha e a posi i e impac on i m alue, as hey con inue o demons a e
he alue o di e en ia ion as an impo an asse o a i m and b ing g ea e bene i s o sha eholde s
and in es o s in e ms o ma ke e iciency. p e ious s udies ha e basically examined he impac o b and
asse s on i m alue. howe e , s udies on Ko ean i ms ha e used he Ko ea B and powe index (K-Bpi),
which only includes he op h ee b anded i ms in each indus y, so he sample is limi ed. he e o e,
his s udy aims o inc ease he alidi y o he esea ch esul s by using he B and s ock op index (Bs i),
a b and alua ion index ha combines he b and s ock index gene a ed by he b and s ock exchange o
B and s ock and he consume su ey index calcula ed by su eying consume s na ionwide, as a mea-
su e o b and asse s. Acco dingly, we es ablish hypo heses 1, 1-1, and 1-2 as ollows.
hypo hesis 1: B and asse s ha e a posi i e e ec on i m alue.
hypo hesis 1 -1: Fi ms included in he Bs i (B and s ock op index) ha e a highe i m alue han i ms no
included in he Bs i.
hypo hesis 1 -2: Among he i ms included in he Bs i, i ms wi h a highe le el o b and asse s ha e a highe
i m alue.
2.2. The ela ionship be ween b and asse s and c edi a ings. Ande son and Mansi (2009) use a sample
o 2,574 i ms om 1994 o 2004 o es o a signi ican posi i e ela ionship be ween Acsi, a us index
o cus ome sa is ac ion, and key bond ma ke indica o s such as c edi a ings and bond sp eads. his
con i ms ha he mo e sa is ied cus ome s a e wi h a b and, he highe he company’s c edi a ing and,
he e o e, he lowe he cos o inancing. in o he wo ds, cus ome sa is ac ion is an impo an d i e o
i m alue, and highe cus ome sa is ac ion wi h a b and leads o highe expec a ions o u u e cash
lows owing o inc eased p o i abili y, which in u n leads c edi o s o assess he eco e abili y o he
deb hey hold as highe .
using he Ko ea cus ome sa is ac ion index (Kcsi) p o ided by he Ko ea compe ence Associa ion
consul ing as a measu e o cus ome sa is ac ion, Jeon e al. (2012) collec ed he Kcsi esul s o 3,058
indi idual b ands om 2000 o 2010 and hen a e aged he Kcsi o mul iple indi idual b ands owned
by he same company. Based on his da a, an empi ical analysis was conduc ed using 688 samples in
he c edi a ing yea . he esul s con i m ha he Ksci has a posi i e impac on c edi a ings and ha
cus ome sa is ac ion has a mo e signi ican posi i e impac on c edi a ings o se ice companies han
o manu ac u ing companies and o smalle companies han o la ge companies. Kim and lee (2015)
s udied he impac o sus ainable managemen ac i i ies on i m alue and co po a e bond c edi a ings
in he capi al ma ke using esg a ings published by he Ko ea co po a e go e nance council om 2011
o 2014 as a measu e o sus ainable managemen ac i i ies. he empi ical analysis con i ms ha esg
a ings ha e an in o ma ion disclosu e e ec , ha companies wi h highe esg a ings ha e highe i m
alue, and ha esg a ings and co po a e bond c edi a ings a e signi ican ly co ela ed.
in line wi h he abo e, i was con i med ha cus ome sa is ac ion and esg ac i i ies ha e an impac
on c edi a ings. Al hough his p o ides an indi ec indica ion, he e is no di ec esea ch on how he
alue o b and asse s a ec s c edi a ings. since b and asse s a e expec ed o ha e a posi i e impac on
c edi a ings by inc easing he in low o cash lows om sus ained inc eases in p o i abili y, we p opose
hypo hesis 2 as ollows:
hypo hesis 2: B and asse s ha e a posi i e e ec on he c edi a ings.
hypo hesis 2 -1: Fi ms ha a e included in he Bs i (B and s ock op index) ha e a highe c edi a ing han
i ms ha a e no included in he Bs i.
hypo hesis 2 -2: Among he i ms included in he Bs i, hose wi h a highe le el o b and asse s ha e highe
c edi a ings.
2.3. Mode a ing e ec o he business li e cycle. p e ious s udies on he i m li e cycle include An hony
and amesh (1992), who analyze he di e en ia ion o inancial in o ma ion in accoun ing o e he li e
cycle; Black (1998), who examines he alue ele ance o cash lows and accoun ing ea nings o e he
li e cycle; and Dickinson (2011), who iden i ies he i m li e cycle using cash lows.
4 M.-Y. shin e Al.
An hony and amesh (1992) dis inguish be ween he economic and inancial cha ac e is ics o a i m
and ela e hem o i s li e cycle using a iables such as sales g ow h a e, di idend payou a io, capi al
expendi u e a io, and i m age. his shows ha sales g ow h and he capi al expendi u e a io a e
impo an a iables in he g ow h s age o a i m; hus, unexpec ed sales g ow h and he capi al expen-
di u e a io a e posi i ely ela ed o abno mal s ock e u ns in he g ow h s age, while he ela ionship
is di e en in he decline s age. Black (1998) examined he ela i e alue ele ance o cash lows om
ope a ing, inancing, and in es ing ac i i ies o accoun ing ea nings a di e en s ages o a i m’s li e
cycle. he empi ical esul s show ha he book alue o equi y and cash lows has high alue ele ance
du ing he g ow h s ages. h iba and Yehuda (2007) ound ha i ms’ acc uals in he g ow h s age a e
mo e alue- ele an han hose in he ma u i y o decline s ages. his is e idence ha he ma ke ’s pe -
cep ion o acc uals in g ow h companies is no a isk phenomenon bu an indica o o g ow h. Dickinson
(2011) measu ed a i m’s li e cycle based on cash lows om ope a ing, inancing, and in es men ac i -
i ies. each ac i i y p o ides clea p edic i e in o ma ion on u u e p o i abili y. Won and yu (2016)
di ided he i m li e cycle in o g ow h, ma u i y, and decline phases and empi ically analyzed he impac
o compe i i e s a egies on pe o mance pe sis ence in each phase. hey ound ha di e en ia ion s a -
egies in he g ow h phase ha e a posi i e impac on pe o mance pe sis ence. choi (2018) empi ically
analyzes he e ec o ad e ising expendi u e on i m alue acco ding o a i m’s li e cycle. he esul s
show ha ad e ising expendi u e in he g ow h s age has a posi i e e ec on i m alue, while ad e -
ising expendi u e in he decline s age has a ela i ely nega i e e ec on i m alue compa ed o o he
li e cycles. As we can see, he ele ance o i m alue and c edi a ings a ies ac oss he i m li e cycle,
depending on he s udy and objec i e.
Based on p e ious s udies, we ca ego ized a i m’s li e cycle in o g ow h, ma u i y, and decline. po e ’s
(1980) compe i i e s a egy is di ided in o p oduc and cos leade ship s a egies. A di e en ia ion s a -
egy is a s a egy o achie e compe i i e ad an age by p oducing se ices and p oduc s ha a e di e -
en ia ed om compe i o s; he e o e, i is necessa y o conduc esea ch and de elopmen o apply
design and inno a ion echnology and ad e ising ac i i ies o p omo e p oduc s. on he o he hand,
he cos ad an age s a egy is a s a egy o achie e compe i i e ad an age by educing cos s and ies
o educe cos s h ough he e icien use o app op ia e acili ies ha can ealize economies o scale and
lea ning e ec s om expe ience cu es. in gene al, a cos ad an age s a egy is app op ia e when he
ma ke is highly compe i i e, and a di e en ia ion s a egy is app op ia e when he ma ke is no highly
compe i i e (Du and & coeu de oy, 2001). he e o e, a di e en ia ion s a egy is app op ia e o i ms in
he g ow h s age because he &D o di e en ia ed se ices and p oduc s is impo an and he e is no
much compe i ion in he ma ke , and a cos ad an age s a egy is app op ia e o i ms in he decline
s age because i is di icul o inc ease p o i abili y due o high compe i ion in he ma ke (choi, 2018).
As such, i is impo an o i ms in he g ow h s age o expand hei ma ke sha e by inc easing sales
h ough compe i i e ad an age om di e en ia ion s a egies, so ha hey can expec con inuous sales
pe o mance h ough ad e ising and &D o imp o e hei p oduc s and co po a e image (Won &
yu, 2016).
As shown in p e ious s udies, du ing he g ow h phase, i ms ocus on ad e ising and &D o build
b and asse s o secu e compe i i e ad an age h ough di e en ia ion s a egies. Acco dingly, h iba and
Yehuda (2007) ind ha in g ow h s ages wi h high g ow h le els, in es o s espond o g ow h indica o s
as an impo an ac o in aluing i ms because hey expec u u e p o i abili y. his g ow h phase is
cha ac e ized by apidly inc easing sales and ma ke sha e gains as consume s become mo e awa e o
he p oduc o se ice owing o b and asse s, aising expec a ions o u u e g ow h po en ial and p o -
i abili y. Despi e he ac ha he business li e cycle can a ec he impac o b and asse s on i m alu-
a ion, his impac has ne e been s udied. he e o e, he impac o b and asse s on i m alue is expec ed
o be g ea e o g ow h-s age i ms han o o he li e-cycle s ages. hus, we se hypo hesis 3 as ollows:
Hypo hesis 3:
he e ec o b and asse s on i m alue a ies o e he li e cycle o a i m.
hypo hesis 3 -1: he e ec o Bs i inclusion on i m alue is g ea e o i ms in he g ow h s age han o
i ms in o he s ages o hei li e cycle.
cogen Business & MAnAgeMen 5
hypo hesis 3 -2: Among he i ms included in he Bs i, he e ec o b and asse s on i m alue is g ea e o
i ms in he g ow h s age han o hose in o he s ages o he i m li e cycle.
Du ing he g ow h s age, he di e en ia ion s a egy h ough b and asse s can expand ma ke sha e
and inc ease p oduc demand, which in u n inc eases ope a ing cash low in lows due o he con inuous
gene a ion o ea nings, hus imp o ing u u e epaymen capaci y (Ahn, 2015). Acco dingly, we expec
g ow h-s age i ms o ha e less unce ain y abou hei u u e epaymen capaci y han o he li ecycle
i ms. Fo his eason, he impac o b and asse s on c edi a ings may also be in luenced by he busi-
ness li e cycle, which has no been s udied. he e o e, he e ec o b and asse s on c edi a ings is also
expec ed o be g ea e o i ms in he g ow h s age, leading o hypo hesis 4, as ollows:
hypo hesis 4: he e ec o b and asse s on c edi a ings a ies o e a i m’s li ecycle.
hypo hesis 4 -1: he e ec o Bs i inclusion on c edi a ings is g ea e o i ms in he g ow h s age han o
i ms in o he s ages o hei li e cycle.
hypo hesis 4 -2: Among he i ms included in he Bs i, he e ec o b and asse s on c edi a ings is g ea e
o i ms in he g ow h s age han o hose in o he s ages o he i m li e cycle.
3. Resea ch design
3.1. Resea ch model.
3.1.1 Resea ch model o hypo hesis 1. he esea ch model used o analyze hypo hesis 1, whe he b and
asse s ha e a posi i e e ec on i m alue, is an ols model wi h i m alue as a dependen a iable,
a iables ela ed o b and asse s as independen a iables, and a iables known o a ec i m alue in
p e ious s udies as con ol a iables (Ande son & Mansi, 2009; An hony & amesh, 1992; Ba h e al.,
1998). Basically, we e e o he model desc ibed by Kim e al. (2019) and change o add dependen and
explana o y a iables o i ou s udy.
As con ol a iables, we include in ou model a iables ha ha e been used in he li e a u e as possible
ac o s a ec ing i m alue and c edi a ings. o al asse s (siZe) is included as a a iable o con ol o
i m size e ec s and po en ial abili y o be a going conce n, and unlike he o he a iables, i is no a
a io, bu a he a loga i hmic alue due o i s la ge alue (Ande son & Mansi, 2009). Ad e ising expen-
di u es (AD) and &D expendi u es ( D) a e calcula ed by di iding hem by sales, and a e included as
con ol a iables because hey can a ec i m alue and c edi a ings as hey a e he media o s o b and
asse s (Kim e al., 2019). he deb - o-equi y a io (le ) is an indica o o inancial s eng h calcula ed by
di iding o al deb by o al asse s, and he highe he deb - o-equi y a io, he highe he i m alue due
o he le e age e ec (choi, 2018). in addi ion, e u n on asse s ( oA) is a measu e o a i m’s p o i abili y,
and a mo e p o i able i m is expec ed o be posi i e o i s alua ion and c edi a ing. We also include
indus y dummies (inD) and yea dummies (YD) as we need o con ol o indus y and yea e ec s.
o es hypo hesis 1-1 and hypo hesis 1-2 in de ail o hypo hesis 1, we se up he model o eqs. (1)
and (2) as ollows:
TQ DBSTI SIZE AD RD
LEV ROA YD IND
=+ + ++
+ + +∑ +∑ +
ββ β β β
ββ
01 2 3 4
56 ε (1)
TQ BSTI SIZE AD RD
LEV ROA YD IND
=+ + ++
+ + +∑ +∑ +
ββ β β β
ββ
01 2 3 4
56
ε
(2)
he e,
TQ
: obin’s Q (=(ma ke alue o equi y + book alue o liabili ies)/ o al asse s)
DBSTI
: Dummy a iable indica ing whe he he i m is included in he Bs i (=1 i he i m is included)
(in he Bs i, 0 o he wise).
BSTI
: B and asse s (=log o he sum o b and a ings).
SIZE
: Fi m size (=(de elopmen expense + &D expenses)/sales)
6 M.-Y. shin e Al.
AD
: Ad e ising expenses (ad e ising expense/sales)
RD
: &D expenses (=(de elopmen expense + &D expenses)/sales)
LEV
: le e age a io (deb / o al asse s)
ROA
: e u n on asse s (ne income/ o al asse s).
YD
: Yea dummy a iables
IND
: indus y dummy a iables (based on he middle classi ica ion le el o he Ko ean s anda d)
(indus ial classi ica ion lis )
ε
: esiduals
We used obin’s Q as a p oxy o i m alue. i , as expec ed om hypo hesis 1-1, i ms ha a e included
in he Bs i and ha e b and asse announcemen s a e mo e aluable han i ms ha a e no , he eg es-
sion coe icien β1 o he independen a iable Bs i in eq. (1) is expec ed o ha e a signi ican ly posi i e
alue. Fu he mo e, i he highe he le el o b and asse s, he highe he i m alue, as expec ed om
hypo heses 1-2, he alue o he eg ession coe icien β1 o he independen a iable Bs i in eq. (2) is
expec ed o be signi ican ly posi i e.
3.1.2 Resea ch model o hypo hesis 2.hypo hesis 2 examined whe he b and asse s ha e a posi i e e ec
on c edi a ings. We se up he model in eq. (3) o hypo hesis 2-1, and eq. (4) o hypo hesis 2-2. he
models in eqs. (3) and (4) a e used by eplacing he dependen a iable wi h he c edi a ing sco e (c s)
in he models in eqs. (1) and (2).
CRS DBSTI SIZE AD RD
LEV ROA YD IN
=+ + ++
+ + +∑ +∑ +
ββ β β β
ββ
01 2 3 4
56 Dε (3)
CRS BSTI SIZE AD RD
LEV ROA YD IND
=+ + ++
+ + +∑ +∑ +
ββ β β β
ββ
01 2 3 4
56
ε
(4)
he e,
CRS
: c edi a ing sco e (Kis c edi a ing sco e p o ided by nice c edi a ing)
DBSTI
: Dummy a iable indica ing whe he he i m is included in he Bs i (=1 i he i m is included)
(in he Bs i, 0 o he wise).
BSTI
: B and asse s (=log o he sum o b and a ings).
SIZE
: Fi m size (=(de elopmen expense + &D expenses)/sales)
AD
: Ad e ising expenses (ad e ising expense/sales)
RD
: &D expenses (=(de elopmen expense + &D expenses)/sales)
LEV
: le e age a io (deb / o al asse s)
ROA
: e u n on asse s (ne income/ o al asse s).
YD
: Yea dummy a iables
IND
: indus y dummy a iables (based on he middle classi ica ion le el o he Ko ean s anda d)
(indus ial classi ica ion lis )
ε
: esiduals
in he model o eqs. (3) and (4), c s is he Kis c edi a ing sco e p o ided by he nice c edi a ing.
he Kis c edi a ing sco e is one o he mos widely used c edi a ings in sou h Ko ea. i is a c edi
a ing calcula ed by combining a inancial a ing model wi h a de aul p edic ion model and is com-
posed o a sco e om 1 o 10, wi h 10 being he highes a ing. excellen companies ecei ed a sco e
close o 1, and poo companies ecei ed a sco e close o 10. o acili a e he in e p e a ion o he
empi ical esul s, we scaled he ecip ocal o he c edi a ing sco e by he sequence alue, ha is, we
assigned a sco e o 10 o he i m wi h he highes c edi sco e and a sco e o 1 o he i m wi h he
lowes c edi sco e.
As expec ed om hypo hesis 2-1, i i ms in he Bs i ha e highe c edi a ings han i ms no in he
Bs i, he alue o he eg ession coe icien o he independen a iable DBs i, β1, is expec ed o be
signi ican and posi i e. in addi ion, as expec ed om hypo hesis 2-2, i he highe he le el o b and
cogen Business & MAnAgeMen 7
asse s, he highe he c edi a ing, he highe he alue o he eg ession coe icien β1 o he indepen-
den a iable Bs i is expec ed o ha e a signi ican posi i e alue.
3.1.3 Resea ch model o hypo hesis 3.hypo hesis 3 examines whe he he impac o b and asse on i m
alue di e s by a i m’s li e cycle. o analyze his, a e measu ing he i m li e cycle, we add he measu ed
i m li e cycle a iable o he model in eqs. (1) and (2) as well as an in e ac ion a iable wi h he a iables
ela ed o b and asse s. o es he de ailed hypo heses 3, hypo hesis 3-1 and hypo hesis 3-2, we se up
he model o eqs. (5) and (6) below.
TQ DBSTI LCG DBSTI LCG SIZE
AD RD LEV R
=+ ++ +
+++ +
ββ β β β
βββ β
01 2 3 4
5 67 8
*
OO A Y D I N D+∑ +∑ +
ε
(5)
TQ BSTI LCG DBSTI LCG SIZE
AD RD LEV RO
=+++ +
+++ +
ββ β β β
βββ β
0123 4
5 67 8
*
AA Y D I N D+∑ +∑ +
ε
(6)
he e,
TQ
: obin’s Q (=(ma ke alue o equi y + book alue o liabili ies)/ o al asse s)
DBSTI
: Dummy a iable indica ing whe he he i m is included in he Bs i (=1 i he i m is included)
(in he Bs i, 0 o he wise).
BSTI
: B and asse s (=log o he sum o b and a ings).
lcg: Dummy a iable indica ing whe he he i m is in he g ow h s age (= 1 i he i m is ing ow h
s age o i s i m li e cycle and 0 o he wise)
SIZE
: Fi m size (=(de elopmen expense + &D expenses)/sales)
AD
: Ad e ising expenses (ad e ising expense/sales)
RD
: &D expenses (=(de elopmen expense + &D expenses)/sales)
LEV
: le e age a io (deb / o al asse s)
ROA
: e u n on asse s (ne income/ o al asse s).
YD
: Yea dummy a iables
IND
: indus y dummy a iables (based on he middle classi ica ion le el o he Ko ean s anda d)
(indus ial classi ica ion lis )
ε
: esiduals
he i m li e cycle a iable is measu ed by yea o each i m, calcula ing he cu en yea ’s measu e
and he p e ious ou yea s’ measu es and using he median o he i e-yea measu e as he cu en
yea ’s measu e. o measu e he i m li e cycle, we use he median o he i e-yea measu e o con ol o
ola ili y in each yea , because i is di icul o con ol o special ci cums ances in a gi en yea when
using only he cu en yea ’s measu e (An hony & amesh, 1992).
he yea ly measu es o he i m li e cycle we e selec ed based on a combina ion o An hony and
amesh (1992), DeAngelo e al. (2006), and h iba and Yehuda (2007). We use quin iles o he sales
g ow h a e, employee g ow h a e, capi al expendi u e g ow h a e, M/B a io, and e ained
ea nings- o-equi y a io. Because he g ow h s age is cha ac e ized by highe g ow h a es o sales,
employees, capi al expendi u es, and M/B a io a iables, we assign a sco e o 1 o 5 om he op
qua ile o hese a iables. on he o he hand, he e ained ea nings- o-equi y a io is lowe du ing he
g ow h s age, so we assign a sco e o 1 o 5 om he bo om qua ile. We so ed he da a based on
he sum o he sco es o each yea o he i e measu emen indica o s o each company om he
lowes 5 o he highes 25 and hen di ided hem in o h ee qua iles (Won & yu, 2016). he sum o
he measu emen sco es om 5 o 11 was classi ied as he g ow h s age, om 12 o 18 as he ma u i y
s age, and om 19 o 25 as he decline s age. he c i e ia o de e mining he i m li e cycle o each
a iable a e shown in able 1.
As expec ed in hypo hesis 3-1, i he e ec o Bs i inclusion on i m alue is g ea e o g ow h s age
i ms han o o he li e cycle i ms, he eg ession coe icien o he in e ac ion a iable DBs i*lcg, β3,
ha e a signi ican ly posi i e alue. Fu he mo e, as expec ed in hypo hesis 3-2, i he e ec o he le el
o b and asse s on i m alue is g ea e o g ow h s age i ms han o o he li e cycle i ms, he eg es-
sion coe icien o he in e ac ion a iable Bs i*lcg, β3, is expec ed o ha e a signi ican ly posi i e alue.
14 M.-Y. shin e Al.
and he inal app o al o he e sion o be published as a co esponding au ho . All au ho s ag ee o be accoun able
o all aspec s o he wo k.
Disclosu e s a emen
no po en ial compe ing in e es was epo ed by he au ho s.
Funding
his esea ch was inancially suppo ed by hansung uni e si y.
Abou he au ho s
Mi-Young Shin (Fi s Au ho ) ecei ed he ph.D. deg ee om hansung uni e si y.
Kyunbeom Jeong (co esponding Au ho ) is an Associa e p o esso a hansung uni e si y, Ko ea. he ecei ed his
ph.D. deg ee om Ko ea Ad anced ins i u e o science and echnology(KAis ). his a eas o in e es include inancial
accoun ing, managemen accoun ing and accoun ing audi .
Da a a ailabili y s a emen
Da a a e a ailable upon eques om he au ho s.
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