The Association of Firm Risk Measures and Accounting Information in the Korean Capital Market

Abstract

The purpose of this study is to investigate and document an empirical

relation between the risk of a firm and firm-specific information such as

financial leverage and other variables in the Korean capital market.

The results indicate that in the Korean capital market, the working

capital position and firm size are positively associated with various risk

measures. For the financial leverage variable, we observe inconsistent

results with respect to different risk measures; financial leverage and

total risk are positively associated, while financial leverage and

systematic risk are negatively associated. It is interesting, therefore,

that the Korean market exhibits somewhat different features from those

found in U.S. empirical results and in the theory of finance.