Research Hypotheses Summative evaluation Learning process evaluation and does it

2674 5. Content analysis of companies‘ annual reports will also be carried out to gaugeanalyse the level of IC repoting; The research will also be conducted via interviews and postal survey with the aid of questionnaires. 3.4 Sampling Procedure and Data Collection This research will use simple random sampling as the research is attempting to value IC of Malaysian public listed companies main board. Various methods of investigation such as self-administered andor postal survey and interviews will be employed. Interviews will be conducted on selected companies after preliminary survey. Other financial data such as market to book ratio MTBR, profit, etc will be obtained from DataStream. Strategic management and measurementaccounting literature both provide huge amounts of intellectual capital related information, which will be used to create an instrument IC-index for the measurement purpose. Studies among these areas and especially in the area of capital market research contain disclosure indexes, where items of intellectual capital exist. Although these indexes contain most often other elements as intellectual capital as well, they can be used to help the structural formation of the planned index. At this point of process it seems that there will be three main categories in this index – human, structural and relational capital – which all contain items of intellectual capital. A pilot study will verify that the questionnaire is properly designed and the items are understood in a proper manner. The pilot study also allows to add items of intellectual capital to the index that the respondents feel absent. Managers of financial and personnel administration should probably be stressed, when executing the survey. A 1-to-5 or 1-to-7 Disagree-Agree type scale δikert scale will be used to score firms‘ intellectual capital. 3.5 Data Analysis Besides descriptive statistics, quantitative analysis such as factor analysis and regression analysis will be conducted. Regression model for example can be used to test the importance of intellectual capital for companies‘ financial performance. Factors such as size, industry, ownership, etc can be used to split the data in more detail. Furthermore, each element of the IC Index can be tested separately to find out their importance for companies‘ financial performance. In addition, qualitative analysis will be conducted on the findings of interviews. 3.6 Potential Results of the Study First of all, this study aims to construe a deeper understanding of the role of intellectual capital in firm‘s business processes and financial performance. Some models of economics are used to describe the core functions and operational environment of firms, whereas models explaining firms‘ 2675 competitiveness are used to analyze the role and importance of organizational capabilities and resources in business processes. Elements and separate items of intellectual capital will be linked to the issues that have emerged from the competitiveness analysis. This is the conceptual contribution of the study. Secondly, the results of the survey could hint what kind of intellectual capital elements are vital for the companies that are engaged in business activities. As the survey covers companies in different size and industry, some information about the elements that trigger the performance may unfold as well. In addition, the survey is of course to find out, whether the intellectual capital affects firms‘ financial performance or not. The main objective of the study is to come up with the IC Index for Malaysian companies. This may interest firms, as intangibles are difficult to measure and control, and by that way lead to further research subjects. The Index may provide some consistency for the measurement and reporting of intellectual capital for companies. REFERENCES Abeysekera, I., 2001. A Framework to Audit Intellectual Capital, Journal of Knowledge Management Practice , Vol. 2. Abeysekera, I., 2007. Intellectual Capital Reporting between a Developing and Developed Nation, Journal of Intellectual Capital, Vol. 8, No.2, pp. 329-345. Abeysekera, I. Guthrie, J., 2000. Status of Intellectual Capital Reporting in Sri Langka – A Research Note, Working Paper, Sydney, Australia. Abdul Latif Salles Fauziah Selamat 2007. Intellectual Capital Management in Malaysian Public Listed Companies, International Review of Business Research Papers , Vol. 3, No. 1, pp. 266-27. Arvidsson, Susanne 2003 Demand and Supply of information on intangibles – The case of Knowledge-Intense Companies, PhD dissertation, Department of Business Administration, Lund University: Lund Business Press. Bontis, N., 2001. Assessing Knowledge Assets: A review of the Models Used to Measure Intellectual Capital, International Journal of Managment Reviews , Vol. 3, No. 1, pp. 41-60. Bontis, Nick – Keow, William Chua Chong – Richardson, Stanley 2000 Intellectual Capital and Business Performance in Malaysian Industries, Journal of Intellectual Capital , Vol. 1, Issue 1, 85 –100. Bontis, Nick – Fitz-enz, Jac 2002 Intellectual Capital ROI:A Causal Map of Human Capital Antecedents and Consequents, Journal of Intellectual Capital , Vol. 3, No. 3, 223 –247. Chen, Ming-Chin – Cheng, Shu-Ju – Hwang, Yuhchang 2005 An Empirical Investigation of the Re lationship between Intellectual Capital and Firms‘ 2676 Market Value and Financial Performance, Journal of Intellectual Capital, Vol. 6, No. 2, 159-176. Deegan, C. 2000. Financial Accounting Theory. McGraw-Hill, Sydney. Economic Planning Unit 2001. The Third Outline Perspective Plan 2001- 2010, Prime Minister‟s Department, Putrajaya, Malaysia. Edvinson, L Malone, M.S. 1997. Intellectual Capital: Realizing Your Company‟s True Value by Finding Its Hidden Brain Power. 1st Edition, Harper Collins Publishers, New York. Firer, Steven – Williams, Mitchell S. 2003 Intellectual Capital and Traditional Measures of Corporate Performanc, Journal of Intellectual Capital, Vol. 4, No. 3, 348 –360. Guidelines for Managing and Reporting on Intangibles. MERITUM-project. The Research Institute of the Finnish Economy . Guthrie, J. Petty, R. 2000. Intellectual Capital: Australian Annual Reporting Practices, Journal of Intellectual Capital, Vol. 1, No. 3, pp. 241-251. Guthrie, J. Petty, R., Yongvanich, K., Ricceri, F. 2004. Using Content Analysis as a Research Method to Acquire into Intellectual Capital Reporting, Journal of Intellectual Capital, Vol. 5, No. 2, pp. 282-293. Huang, Cheng Jen – Liu, Chun Ju 2005 Exploration for the Relationship between Innovation, IT and Performance, Journal of Intellectual Capital, Vol. 6, No. 2, 237 –252. Hurwitz, Jason – Lines, Stephen – Montgomery, Bill – Schmidt, Jeffrey 2002 The Linkage between Management Practices, Intangibles Performance and Stock Returns, Journal of Intellectual Capital, Vol. 3, No. 1, 51 –61. Kamaluddin, A. and Abdul Rahman, R. 2007. Intellectual Capital Reporting in Malaysia, Accountants Today, pp. 18-20. Rodov, Irena – Leliaert, Philippe 2002 FiMIAM: Financial Method of Intangible Assets Measurement, Journal of Intellectual Capital, Vol. 3, No. 3, 323 –336. Subbarao, A.V. Zeghal, D. 1997. Human Resource Information Disclosure in Annual Reports: An International Comparison, Journal of Human Resource Costing Accounting , Vol. 2, No.2, pp. 53-73. Sveiby, K.E. 1997. The Intangible Assets Monitor, Journal of Human Resource Costing Accounting , Vol. 2, No.1, pp. 7-97. Sveiby, K.E. 1989. The Invisible Balance Sheet: Key Indicators for Accounting, Control, and Valuation of Know-How Companies. Stockholm. 2677 Wang, Wen-Ying – Chang, Chingfu 2005 Intellectual Capital and Performance in Causal Models: Evidence from the Information Technology Industry in Taiwan, Journal of Intellectual Capital, Vol 6., No 2., 222 –236. Williams, S.M. 2001. Is Intellectual Capital Performance and Disclosure Practices Related?, Journal of Intellectual Capital, Vol. 2, No. 3, pp. 192- 203. List of Figure Classifications for Intangible Assets Arvidsson, 2003 Financial Accounting: External Usage, Measurement Accounting literature Human capital Management Accounting: Internal Usage, Strategic Management literature Relational capital BSC- approach Structural capital Comprehensive- approach Listing- approach Figure 1. Classifications for Intangible Assets Figure 1. Classifications for Intangible Assets 2678 THE EFFECT OF FINANCIAL CRISIS AT KOREAN STOCK MARKET Jang Hee Lee, Dongseo University Abstract In this study‘s analysis pre and post the Financial Crisis, the value correlations of the accounting information and the additional explanation ability of the fundamental variables were found to be very high after the Financial Crisis. The significant fundamental variables varied pre and post the crisis. Inventory SALINV was found to be significant before the Financial Crisis but was found insignificant after. On the other hand, Accounts Receivable ΔSALAR and Personnel Expenses ΔASLR were not significant before the Financial Crisis but significant after the crisis, and the signs also changed from negative - to positive +. Meanwhile, Gross Profits ΔGMSAL showed negative - coefficients before the crisis, but showed positive + coefficients after. Also, the results from conducting regression analysis using POST, which is the dummy variable representing the periods pre and post the Financial Crisis, show that Gross Profits PO STΔGMSAL, Sales POSTΔSALA, Cost of Sales POSTΔCGSA, Accounts Receivable POSTΔSALAR and Personnel Expenses POSTΔASLR showed positive + signs, but Equipment Investment POSTΔCAPEX and Assets POSTΔASA showed negative - signs.

1. Introduction

The Korean economy has been undergoing many changes since the 1997 Financial Crisis. Such radical changes in the capital market include expansion in foreign stock investments in stocks, full-scale advance of foreign financial institutions into the Korean market, selling off domestic enterprises overseas, and the expansion of foreign ownership rate in domestic enterprises. Owing to such rapid changes after the Financial Crisis, investment methods in the Korean stock market have also changed. As is the case with other countries, investment analysts of securities companies in Korea evaluate the intrinsic value of the enterprises through fundamental analysis using financial statements and the current investment opinions on applicable enterprises and industries. Generally after the crisis, investments in stocks are advised based on the opinions of these securities analysts. Particularly after the crisis, the country‘s securities companies made full- scale investments in establishing research centers competitively based on favorable business results following the stock market boom in 1998. Backed by the extensive investments in the business analysis sector, investment analysts have been greatly growing both qualitatively and quantitatively. Analysts utilizing fundamental analysis are considered the best analysts by media organizations. Based on such growths, research centers of securities 2679 companies have been able to conduct more systematic and logical corporate analyses. Accordingly, the use of corporate analysis reports has become generalized and the influence of investment analysts continues to expand. The investment analysts of securities companies utilized the fundamental analysis in order to find and analyze the stocks that deviate from intrinsic values as being overestimated or underestimated in the efficient market. The investment strategy that utilizes fundamental analysis suggests to buy underestimated stocks and to sell overestimated stocks. Meanwhile, focusing on profit information, researches have been made on the effect of information that began to support the utility of financial statements information in the study of accounting. Such research works were based on the assumption that the sum of the present value of future cash flows is the corporate value and that the profit information can be used as the replacing value of cash flows. In the actual capital market, however, the ability to explain the fluctuations of stock prices is found to be minimal. This is primarily due to the fact that prof it information is only one part of a company‘s economic value as contained in the financial statements but the stock prices reflect all information factors contained in the statements. In other words, profit data on the financial statements are important information with regard to the evaluation of corporate values but are only a part of various accounting information. Accordingly, in order to evaluate the utility of financial statements, all the pieces of information reflected in the financial statements should be used, and not only the ones on profit. From the viewpoint of fundamental analysis, this study observed that one can predict future profits by using the collection of information besides the information on stock prices alone on the assumption that stock prices do not sufficiently represent all the necessary information. This thesis therefore attempts to verify how much the Financial Crisis has influenced the effects of financial statements information in the country‘s capital market by utilizing the variables of fundamental analyses that have been generalized through the Financial Crisis. This thesis consists of the following. Chapter 1 explains research objectives and purposes; Chapter 2 explains the conceptual framework of performing the research and describes the research designs; Chapter 3 proves the analysis and presents the results of analysis; and Chapter 4 discusses the results of the research.

II. Research Design 1. Setting Up Hypotheses

Starting from the Financial Crisis that greatly changed the Korean economy, this research will verify whether there are any differences before and after the financial crisis in the use of the financial statements information that utilizes fundamental analysis variables. The reasons for verifying this are twofold. First, due to the Financial Crisis, the accounting transparency of domestic companies was emphasized, expectations for the local companies‘ accounting