Does Quality of Audit Committee Enhance Audit Quality?

Purpose: This study investigates whether quality of audit committee affects audit quality of Korean listed firms using panel data during the period 2008 to 2018.   Theoretical framework: Recent studies show that characteristics of audit committees such as size, activity, and expertise have a significant impact on the monitoring of the financial reporting process (He and Yang, 2014; Asiriuwa et al. 2018). Therefore, it is necessary to carry out systematic empirical studies to understand the effectiveness of the audit committee from various perspectives.   Design/methodology/approach: The quality of audit committee is classified into four categories: 1) activity, 2) independence, 3) expertise, and 4) the presence of female audit committee member. Audit quality is measured by auditor size and accruals quality.   Findings: This study finds that activity and expertise of audit committee enhance audit quality whereas independence of audit committee does not affect audit quality. The female audit committee member partially enhances audit quality.   Research, Practical & Social implications: This study suggests that the high quality of the audit committee enhances the audit quality and increases the accounting transparency of the firm.   Originality/value: The empirical results of this study suggest that firm should concentrate the optimal composition of the audit committee, not simply the establishment of the audit committee

Does Foreign Ownership Increase Financial Reporting Quality?

Using panel data, this paper investigates how foreign ownership affects the financial reporting quality of firms listed on the Korean Stock Exchange (KSE), one of the highest foreign-investor capital markets in the world during the period from 2000 to 2005. Existing studies suggest that foreign ownership may either increase or decrease the quality of financial reporting, suggesting that foreign ownership is explained using two conflicting hypotheses: The active-monitoring hypothesis and the transient hypothesis. In emerging markets, where family ownership is predominant, conservatism is an important measure of financial reporting quality because conservatism decreases opportunistic management behaviours and mitigates information asymmetries. This paper tests conservatism as a proxy for financial reporting quality using three piecewise accrual models, proposed by Ball and Shivakumar (Journal of Accounting Research, 44, 207–256 (2006)); the cash flow model, the Dechow and Dichev model, and the Jones model. This research finds that foreign ownership is positively associated with conservatism in all three models. This result supports the active-monitoring hypothesis of foreign ownership, indicating that foreign ownership mitigates managerial opportunism, thereby increasing the quality of financial reportin

The effect of environmental factors on accounting systems: a comparison between South Korea and Australia

As globalization of the business environment increases, cross-national accounting differences have been the main focus of international accounting research. Specifically, the relationship between accounting and environmental factors has been the subject of many debates over the last decade. In comparative studies of accounting history, culture and practices, researchers have become increasingly aware of the importance of environmental factors in shaping a country's accounting system. This study explores whether environmental factors influence accounting systems by comparing South Korea and Australia. Although both South Korea and Australia were colonies, they had different cultural backgrounds and different legal/judicial systems. Australia's accounting standards-setting process is based on business practices and is relatively open to public opinion, while Korea's accounting standards tend to be enforced by the government and harmonized to tax law. Many prior studies suggest that environmental factors can be a valuable tool in explaining and understanding differences in the way in which accounting operates in countries with different environments. Based on environmental factors, this study found that cultural factors and institutional structures have a significant influence on the development of accounting systems and cause their differences. This study is expected to provide a systematic framework for differences in the development of accounting systems by analyzing the effects of environmental factors on accounting systems

Measuring Earnings Quality over Time

The purpose of this paper is to analyze earnings quality over the twelve years. We measure earnings quality as two types of dimensions: 1) decision usefulness and 2) stewardship (or accountability) based on the conceptual framework of the International Financial Reporting Standards (IFRS). This paper investigates earnings quality of listed firms on the Korean Stock Exchange (KSE) using a sample of 9,584 firm-year observations over the period 1995 to 2006. Earnings quality as decision usefulness is measured as persistence and value-relevance, while earnings quality as stewardship (or accountability is measured as conservatism and accruals quality. This study finds earnings quality of Korean firms is relatively lower than that of developed countries across three earnings quality dimensions except for conservatism. Thus, it is likely that Korean firms engage in earnings management in the presence of economic incentives, thereby reducing earnings quality. Keywords: Earnings Quality, Decision Usefulness, Stewardship JEL Classifications: G30, M

Efficient mutation screening for cervical cancers from circulating tumor DNA in blood

Background Early diagnosis and continuous monitoring are necessary for an efficient management of cervical cancers (CC). Liquid biopsy, such as detecting circulating tumor DNA (ctDNA) from blood, is a simple, non-invasive method for testing and monitoring cancer markers. However, tumor-specific alterations in ctDNA have not been extensively investigated or compared to other circulating biomarkers in the diagnosis and monitoring of the CC. Therfore, Next-generation sequencing (NGS) analysis with blood samples can be a new approach for highly accurate diagnosis and monitoring of the CC. Method Using a bioinformatics approach, we designed a panel of 24 genes associated with CC to detect and characterize patterns of somatic single-nucleotide variations, indels, and copy number variations. Our NGS CC panel covers most of the genes in The Cancer Genome Atlas (TCGA) as well as additional cancer driver and tumor suppressor genes. We profiled the variants in ctDNA from 24 CC patients who were being treated with systemic chemotherapy and local radiotherapy at the Jeonbuk National University Hospital, Korea. Result Eighteen out of 24 genes in our NGS CC panel had mutations across the 24 CC patients, including somatic alterations of mutated genes (ZFHX3-83%,KMT2C-79%, KMT2D-79%, NSD1-67%,ATM-38% andRNF213-27%). We demonstrated that theRNF213mutation could be used potentially used as a monitoring marker for response to chemo- and radiotherapy. Conclusion We developed our NGS CC panel and demostrated that our NGS panel can be useful for the diagnosis and monitoring of the CC, since the panel detected the common somatic variations in CC patients and we observed how these genetic variations change according to the treatment pattern of the patient

Minimal information for studies of extracellular vesicles (MISEV2023): From basic to advanced approaches

Extracellular vesicles (EVs), through their complex cargo, can reflect the state of their cell of origin and change the functions and phenotypes of other cells. These features indicate strong biomarker and therapeutic potential and have generated broad interest, as evidenced by the steady year-on-year increase in the numbers of scientific publications about EVs. Important advances have been made in EV metrology and in understanding and applying EV biology. However, hurdles remain to realising the potential of EVs in domains ranging from basic biology to clinical applications due to challenges in EV nomenclature, separation from non-vesicular extracellular particles, characterisation and functional studies. To address the challenges and opportunities in this rapidly evolving field, the International Society for Extracellular Vesicles (ISEV) updates its 'Minimal Information for Studies of Extracellular Vesicles', which was first published in 2014 and then in 2018 as MISEV2014 and MISEV2018, respectively. The goal of the current document, MISEV2023, is to provide researchers with an updated snapshot of available approaches and their advantages and limitations for production, separation and characterisation of EVs from multiple sources, including cell culture, body fluids and solid tissues. In addition to presenting the latest state of the art in basic principles of EV research, this document also covers advanced techniques and approaches that are currently expanding the boundaries of the field. MISEV2023 also includes new sections on EV release and uptake and a brief discussion of in vivo approaches to study EVs. Compiling feedback from ISEV expert task forces and more than 1000 researchers, this document conveys the current state of EV research to facilitate robust scientific discoveries and move the field forward even more rapidly

Economic Analysis for Investment of Public Sector’s Automated Container Terminal: Korean Case Study

The purpose of this case study is to conduct an economic analysis to calculate the proper terminal capacity of automated container terminal (ACT) investment from the perspective of the public sector. As a key element of smart port, the ACT is an important terminal operating facility for import/export and transshipment cargo between countries and must have facilities with sufficient capacity to load/unload export/import cargo in a timely manner according to the user’s request. Recently, the method of calculating the capacity of seaport infrastructure is changing from the method of applying the maximum capacity to the method of applying the proper capacity. Therefore, it is desirable to expand port facilities by investigating proper capacity rather than expanding port facilities based on the maximum performance. This study is a case study focusing on the new port of Busan introducing the ACT. From the perspective of national fiscal income and national economy from the ACT investment, this study determines the proper terminal capacity for each berth. As a result of economic analysis, the break-even terminal capacity to secure economic feasibility is from 544,272TEU of the nine berths to 600,138TEU of two berths applying a 2.96% discount ratio. In a sensitivity analysis considering the social discount rate and the change in the size of berths, the net present value has a positive value from a minimum of 530,000 TEU (nine berths with 1.96% social discount ratio) to a maximum of 620,000 TEU (three berths with 3.46% social discount ratio)

A Study of Rent Fee Assessment on the Port Railway Station: The Litigation Case Study of a Korean Container Terminal

This study provides a systematic method for determining the proper rent fee of a port railway station with a litigation case study of Busan port container terminal. The Port Rail Station Operating Company (PRSOC) leases and operates the port railway station of the port authority (PA). The PA wants to receive a rent fee with the goal of recovering the investment cost, and the PRSOC wants to pay rent to the extent that it can generate an appropriate profit. In order to reasonably estimate the rent fee, this study attempted using a method of estimating the capacity-based demand of the rail station. A recent discussion of terminal rentals concerns what to rent. That is, will only the infrastructure be leased, or will the substructure and the superstructure be leased? Will the infrastructure, superstructure, and equipment be leased? Rail station capacity encounters a bottleneck when measuring railroad track capacity, i.e. RMGC capacity. In other words, arbitrary demand estimation leads to operating losses for PRSOC and may also cause losses to investors because investment costs cannot be recovered. In this study, data such as investment cost, operating cost, and sales required for the construction of the rail station were collected from the Ministry of Ocean and Fishery, PA, and PRSOC. Based on these data, a proper rent fee is proposed by analyzing the cash flow on the premise of operation for the next 30 years. This study adopts the discounted cashflow (DCF) method because DCF allows an objective and consistent comparison of rent fee levels from the PA and PRSOC perspectives. Using DCF, this study finds that the proper rent fee from the perspective of the PA is USD 397,045, while the PRSOC’s proper rent fee is USD 355,801. Thus, it is reasonable to set the standard for determining the proper rent fee by calculating and comparing the rent fee level from the perspective of PA’s investment cost recovery and PRSOC’s operating balance maintenance perspective. This study suggests that the DCF method should be applied to standardize the rent fee calculation system for the port railway station

Estimation of LNG Dolphin Capacity: Dolphins of Different Size in Republic of Korea

The LNG terminals are characterized by a large number of ships entering the port during the winter season due to the seasonality of rapidly increasing demand for heating. In winter, there is a shortage of dolphin jetty wharf (dolphins), which increases the waiting rate for ships. Therefore, there is a practical argument that dolphins should be additionally built to solve the ship standby problem. This study proposes the proper LNG handling capacity of a terminal with multiple dolphins of different size. Studies on calculating the LNG handling capacity of LNG terminal dolphins have been proposed by UNCTAD and Ministry of Transport of China (MTC). The formula-based calculation of LNG handling capacity has the advantage of being simple, but it has the disadvantage of not reflecting the actual operation. In this study, the proper LNG handling capacity is measured using a simulation method to overcome the limitations of formula-based calculation for Incheon port in South Korea. In order to check whether the method by simulation is justified, it is compared with the unloading capacity by the calculation formula. This study finds that the proper (or optimal) LNG handling capacity of Incheon port is determined by a dolphin occupancy of 49%, where the dolphin’s profits are maximized. As the results of simulation model, the proper (or optimal) loading capacity is 38.5 million m3 when dolphin occupancy is 49%. The capacity of individual dolphin is estimated at 17.0 million m3 for 70,000 DWT dolphin and 21.2 million m3 for 120,000 DWT dolphin, respectively. The main points of this study to use simulation model are as follows: First, the number of non-working days should be considered. Second, the optimal dolphin occupancy should be determined by finding the maximum profit point of using the pier. Third, if the size of the dolphin is different, an appropriate simulation will be implemented. Fourth, the data of the peak season should be analyzed. Finally, it should be checked whether the ship waiting rate is acceptable level or not