Taxpayer’s Perception to Tax Payment in Kind System in Support of SMEs’ Sustainability: Case of the South Korean Government’s Valuation of Unlisted Stocks

In Korea, unlisted stock shares are accepted as payment for inheritance tax. In the case of insufficient cash, a taxpayer can pay the government with listed or unlisted stocks (hereinafter referred to as “tax payment in kind”). The drawback of this tax payment system is that receiving tax paid with stocks is subject to the valuation of the government and selling the stocks to an open market requires another valuation. The results of these two valuations show considerable differences, and, therefore, the selling price in the open market is very low. This study analyzes how taxpayers recognize the differences in the valuation results of these unlisted stocks and how the differences affect the pricing for repurchasing the stocks from the open market. Results show that high valuation of unlisted stocks in tax payment in kind drives buyers to lower the purchasing price in the open market. This finding implies a problem in the government’s valuation method of unlisted stocks collected as tax

The association of firm risk measures and accounting information in the Korean capital market

The purpose of this study is to investigate and document an empirical relation between the risk of a firm and firm-specific information such as financial leverage and other variables in the Korean capital market. The results indicate that in the Korean capital market, the working capital position and firm size are positively associated with various risk measures. For the financial leverage variable, we observe inconsistent results with respect to different risk measures; financial leverage and total risk are positively associated, while financial leverage and systematic risk are negatively associated. It is interesting, therefore, that the Korean market exhibits somewhat different features from those found in U.S. empirical results and in the theory of finance