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  • Professor Yasuhiko Torii: An Obituary
  • Postponement of EAEA17 Conference: Call for Papers and Preliminary Information
  • Private Equity Characteristics, Corporate Governance and Firm Value: Empirical Evidence from Small and Medium‐sized Enterprises*

    To extend existing research, this study examines whether private equity (PE) and corporate governance affect firm value using empirical data on the small and medium‐sized boards of listed initial public offering companies in China. The empirical results show that PE investment can raise firm value as well as affect management behavior at the macro level. At the micro level, the greater PE firms' shareholding, the higher is firm value, which is positively influenced by the time the PE stake has been held. PE reputation and foreign PE are also positively related to firm value. Finally, corporate governance plays a partial mediating role in the relationship between PE investment and firm value.

  • Fiscal Sustainability of Local Governments in Japan†

    The total amount of Japan's local government (LG) expenditures exceeds its central government (CG) expenditures. Japan's LG and CG are responsible for the worst general government's debt situation among the G7 countries. The paper elucidated the fiscal reactions of Japan's prefecture governments (PGs) based on Bohn's (1998a, 2005) method with a panel dataset (44PGs, fiscal years 1974–2016), addressing nonstationary and endogeneity issues. In my model, a positive reaction of the primary surplus/gross regional product (GRP) ratio to the PG debt/GRP ratio (d) constitutes a sufficient condition for sustainability. The results of the study demonstrate the following: (i) the PG in any fiscal condition are assumed to provide sustainable fiscal management; (ii) the PGs in sounder or more dire fiscal conditions probably manage their finances more firmly; (iii) the fiscal transfers from the CG generally ease the PG fiscal conditions; (iv) although primary regressors d and dsq (the square of d) are assumed to be I (1) with some accuracy, they become stationary through cointegration with other regressors.

  • Erratum
  • Gender Difference in Returns to Education Independent of Gender Wage Gap in Korea*

    This study examined the difference between male and female groups’ return on investment (ROI) in education independent of the average gender wage gap. Women’s additional ROI in education was significant and positively estimated. Furthermore, the ROI in women’s education was consistently higher than that in men regardless of educational stage, except for graduate education. These gender differences were greater in the younger generation than in the older generation and have decreased significantly in the recent ten years in high school education. Although the additional ROI in women’s education was positive in the field of culture and arts, education’s effect on wage increases in professional occupations was less than in men, especially in the fields of law and medicine. In addition, we show that gender differences in ROI in education were countercyclical. A base effect, large wage declines for low‐educated women during recessions, could explain this phenomenon. However, coinciding with the existence of positive cash flow news in the stock market that promises good business performance, a significant wage increase among highly educated women was found.

  • Issue Information
  • Issue Information
  • Economic Effect of Zoning Regulations on Korea's Small and Medium‐Sized Retailers*

    In this paper, we investigated the economic effects of zoning regulations on the retail industry in Korea. We estimated the changes in the number of sales for retail stores using a panel regression analysis for stores in traditional markets. This analysis was conducted to examine the benefit of zoning regulations on retail stores. Our results show that the zoning regulations (called Traditional Commercial Activity Protection Zones) have contributed to an improvement in the actual business performance of small independent retailers. We found that the amount of sales for each store clearly increased on average in the areas designated as Traditional Commercial Activity Protection Zones where there was no market entry of mega supermarket chains (called SSM in Korea). We also present evidence that the effects of this policy differ geographically: the effects were stronger for small and medium cities than for large metropolitan cities. These results suggest that zoning regulations enacted by the government to protect traditional markets and small retailers should also consider regional differences when assessing policy effectiveness.

  • Price‐Setting Behavior of Korean Firms†

    This paper investigates a pattern of price revision by firms in Korea and sheds light on the cause of price stickiness by providing reliable statistical estimates for calibration of the parameters of the widely‐used macro‐models. Based on firm‐level survey data and using a probit model, we identify the firm characteristics or market conditions that discourage firms from carrying out state‐dependent price adjustment. We also estimate the factors driving firms to engage in state‐dependent adjustment rather than wait until the next scheduled revision under three different shocks: demand, general cost and exchange rate shocks. We find a few interesting features, as follows. First, price revision by Korean firms tends to be time‐dependent rather than state‐dependent, with a sizable dispersion across sectors and firm sizes. Second, the pattern of price revision in Korea is not significantly different from that in selected advanced economies. Third, the reason why firms favor time‐dependent price adjustments appears to be endogenous, accounted for by a number of market institution variables. Fourth, in response to shocks, Korean firms tend to wait until the next periodically scheduled revision rather than make a state‐dependent price adjustment, unless marginal costs are affected significantly by the shock, and state‐dependent revisions are often significantly delayed when they do occur.

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