부채특성과 외국인지분율 간의 관련성

Abstract

This study investigates whether the types of debt financing (i.e., private debt versus public debt) is associated with foreign equity ownership. Prior studies on the types of debt financing suggest that private debt ratio is negatively associated with quality of earnings. But public debt ratio is positively associated with quality of earnings. Thus we expect private debt ratio to be negatively related with foreign equity ownership, and the public debt ratio to be positively related with foreign equity ownership. Kang and Stulz(1997) investigated fators that affect foreign investors’ making decisions to select portfolio in Japan’s stock market for the period of 1975-1991. They report manufacturing industries, large firms, firms with good accounting performance, low unsystematic risk(leverage) as factors affecting foreign investors’ making decisions. Cheon(2003) investigated association between foreign ownership and earnings quality. Cheon(2003) reports that foreign ownership is positively related to earnings quality. But cheon(2003) reports that domestic-institutional ownership is not related to earnings quality. This means that foreign investors consider earnings but domestic-institutional investor do not consider earnings quality. Bharath et al.(2008) report that earnings quality affects the choice of debt(private debt and public debt). Especially Bharath et al.(2008) report that firms of low-earnings quality prefer private debt to public debt. Chun et al.(2011) tested association between debt financing and earnings management(accrual-based earnings management measured by cross-sectional version of modified Jones medel(Dechow et al.(1995) and real activity management measured by cross-sectional version of Roychowhury’s(2006)). Chun et al.(2011) report that firms with relatively high-public debts are less likely to engage in both accrual-based earnings management and real activity management) In this respect, we investigated whether the type debt financing(private debt ratio) is associated foreign equity ownership. The sample consists of non-financial listed KOSPI firms during 2003-2010 period. Foreign equity ownership is used as dependent variable, and private debt ratio(private debt/(private debt+public debt)) is used as independent variable. After controlling for variables related with foreign equity ownership as reported in previous studies, the regression coefficient for the private debt ratio shows statistically significant negative sign. To control for potential endogeneity, 2SLS(two－Stage Least Squares) test has been performed. The empirical result is consistent with the prediction of the research hypothesis. Also, additional test using difference term(between year t and t-1) provides similar results. That is, the types of debt financing affects foreign ownership level, after controlling for known variables. This study contributes to extant literature on foreign equity by providing evidence that types of debt financing affects foreigners’ portfolio selection. The results may help policy makers extend their knowledge on elements affecting foreigners’ investment decisions.