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A Study on the Measurement of Contingent Liability of Construction Companies and Their Corporate Values

Koh Sung Soo 1 Choi Eunyoung 2

1건국대학교
2메리츠증권 부동산금융연구소

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ABSTRACT

This study aims to identify the relationship between the contingent liabilities of PF of construction companies and corporate value, and to analyze the difference in the scale of contingent liabilities of PF by categorizing the characteristics of each factor of construction companies into groups. First, in order to analyze the difference, the study conducted an empirical analysis by transforming a corporate value model by Ohlson(1995); however, the result of the empirical analysis did not show a significant variable concerning the effect of contingent liabilities of PF on corporate value. This is probably either because the significance dropped from the simultaneous appearance of the wealth transfer effect and a signal effect, which has been examined in existing research, or there was not a very affordable announcement of the contingent liabilities of PF of construction companies. Second, as a result of analyzing the difference in contingent liabilities by the characteristics of construction companies with a t-test, the makeup of contingency liabilities of PF of a group with the lower makeup of assets, a group with a low credit rating, and housing construction companies was relatively high. This result means that a group with a low credit rating and construction companies highly focused on housing construction will be exposed to much more risk provided that the contingent liabilities of PF are realized. The result of the empirical analysis in this study may be considerably meaningful to persons in charge of supervising PF.

Citation status

* References for papers published after 2022 are currently being built.