Haeyoung Ryu

When companies invest in their internal accounting personnel, investors place greater trust in disclosed earnings information and highly regard a company’s information transparency. This results in prompt investment decisions regarding the company. Consequently, earnings information will be immediately reflected in stock prices, thereby reducing stock price drift. The purpose of this study is to examine the impact of investments in establishing and operating internal accounting systems on investors’ responses to the mitigation of stock price drift. The study focused on firms listed on the Korea Exchange from 2011 to 2018 and constructed a regression model using the cumulative abnormal return following earnings disclosure dates for 30, 60, and 120 days as the dependent variable, with the characteristics of internal accounting personnel as independent variables. The analysis reveals that companies with many internal accounting personnel and position experts, such as accountants, within their internal accounting control systems, experience a significantly lower stock price drift. The coefficients of the interaction terms between internal accounting personnel characteristics and standardized unexpected earnings are positive and significant at the 1% level for all cumulative abnormal return values. The findings of the study indicate that as efficiency is secured, stemming from the scale of personnel managing internal accounting control systems and their expertise, market investors’ understanding and trust of accounting information also increase. Investors, as information users, react promptly to the earnings information disclosed by the company, leading to a decrease in stock price drift.

Acknowledgments
This work was supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea (NRF-2021S1A5A8070518).

This study investigates whether higher foreign shareholder equity improves labor investment efficiency in South Korean publicly listed firms. Labor investment, like capital investment, plays a crucial role in shaping corporate performance and value. It involves continuous cash outflows and poses challenges during restructuring, such as downsizing. Foreign shareholders are known to take on a monitoring role in Korean firms, potentially leading to more efficient labor investment decisions.
To assess the impact of foreign shareholder involvement on labor investment efficiency, regression analysis was conducted using data from 2,699 firm-year observations from firms listed on the Korean stock exchange during the pre-pandemic period (2016–2019). Labor investment inefficiency was measured as the absolute difference between actual and expected labor investment levels, considering both over- and under-investment as inefficiencies.
The analysis revealed a significant negative relationship between foreign ownership and labor investment inefficiency. Specifically, a regression coefficient of –2.220 (p-value: 0.027) indicates that higher foreign shareholder equity is associated with lower labor investment inefficiency. Further analysis, separating the sample into over-investment and under-investment groups, found that the coefficient for foreign ownership in the under-investment group was –1.920 (p-value: 0.055), significant at the 10% level. These findings suggest that foreign shareholders, through their monitoring role, help reduce information asymmetry, decreasing inefficiencies in labor investment decisions.