Abstract:We conducted an empirical analysis of the dynamic relationship between growth and profitability for small-and medium-sized construction companies that faced long-term economic stagnation in Korea. The period of the analysis spanned 2000 to 2014, and the full period was divided into two halves: before the 2008 global financial crisis and after it. Our empirical model was based on the system generalized method of moments model, and 264 construction companies were used as the study sample. The results of the empirical analysis are as follows. (1) A profitability-driven management strategy limits company growth, thus prolonging the economic downturn; (2) When the macroeconomic environment is relatively stable, high growth in the previous period fosters profitability in the current period. This implies that the phenomenon of dynamic increasing returns is present in the Korean construction industry, and learning through growth enhances productivity and profitability. Consequentially, a strategy oriented towards short-term profitability (popular with small-and medium-sized Korean construction companies) makes the corporate management less resilient, causing them to select "de-growth" during the long-term stagnation by decreasing their scale of operations. Accordingly, it is important for companies to maintain the balance between growth and profitability.

The competitiveness of construction firms may be achieved by effective decision-making and high productivity. Therefore, it is necessary to analyze the efficiency and productivity of construction firms. This study aims to compare the efficiency and productivity of Chinese, Japanese and Korea construction firms between 2005 and 2011 using Data Envelopment Analysis (DEA) and DEA-based Malmquist methods. The analysis process is as follows: 1) Decision Making Units, input and output variables are selected. 2) Efficiency of Chinese, Japanese and Korean construction firms is analyzed by applying DEA and selected variables. 3) Productivity of construction firms is presented as the Malmquist Productivity Index (MPI) by using DEA-based Malmquist and by dividing the MPIs into Technical Change Index and Technical Efficiency Change Index. The analysis results are: 1) the average efficiency score of Korean construction firms (0.861) is higher than those of Japanese construction firms (0.775) and Chinese construction firms (0.639), 2) the average MPI of Chinese construction firms (5.5%) is higher than those of Korean construction firms (0.9%) and Japanese construction firms (-0.1%). The results show that Korean construction firms need to improve productivity more than efficiency to enhance their competitiveness in the market.

No abstract

The present study empirically analyzed the capital structure determinants of 43 listed construction companies in Korea from 2000 to 2010 using multiple regression analysis. Specifically, the empirical analysis focused on changes in the coefficients of the determinants according to the leverage ratio quantiles of the examined construction companies. The empirical analysis found company and non-debt tax shield size to be positively related with leverage among construction companies, whereas profitability, growth, asset tangibility, and liquidity were found to be negatively related with leverage. The major results of the study are: 1) construction companies followed the static tradeoff theory in relation to size; 2) non-debt tax shields had quite limited effects on the capital-structure-related decisions of construction companies; 3) construction companies were found to follow the pecking order theory in relation to profitability; and 4) asset tangibility was estimated to have the opposite sign to that found in previous studies. These results were attributed to the characteristics of the construction business.

No abstract