The Relationship between the Level of Business Ethics and Accounting Transparency for SME and Large Company

This study examines the relationship between corporate ethical commitment index(ECI) calculated by Choi and Jung(2008) and discretionary accruals(DA) estimated by modified Jones model(1995) as accounting transparency. We assume that companies with a higher level of ethical commitment show better quality financial reporting than those with a lower level of ethical commitment. To test the hypotheses, the regression models include ECI and the absolute DA as the dependant or main independent variables to analyze both sides by ex-ante or ex-post on the basis of the year 2008. The test sample consists of 451(ex-ante) and 783(ex-post) firm-year data, selected from the KRX listed companies of 2005～2012. Consistent with our prediction, we find that companies with a higher level of ethical commitment are engaged in less earnings management. We also find that SME(small-medium enterprises) and Large Companies some produce different results for the differences of ethical perceptions with political cost hypothesis.2

The Effect of Patent Rights on the Economic Value Added(EVA) in the Case of KOSDAQ

This study examines the effect of patent rights (PAT) on the future firm value of KOSDAQ firms. The research seeks to determine whether there is a positive association between PAT and economic value added (EVA), after other intangible assets such as development cost (DEVEL), R&D expenditures (RND), advertising costs (AD), and training/education costs (TRC), and other control variables including firm performance, firm size, and debt ratios, have been considered. The test sample consists of 640 firms that were listed in the Korea Exchange between the years 2007-2010. The results of the study suggest that there is a positively significant relationship between EVA and PAT; however, in case of DEVEL, RND, AD, and TRC, no such association has been detected. This implies that, as long as the rights to patents resulting from research and development activities are guaranteed, the markets tends to view holding patent rights as future economic benefits.2