Boochun (Chris) Jung

OFFICE:
Leeds School of Business phone: (303) 492 4405
University of Colorado at Boulder
419 UCB
Boulder, Colorado80309-0419
(303)492-4405
(303)492-5636 (Fax) / HOME:
2300 Arapahoe Avenue #115
Boulder, Colorado80302
(303)786-0575 (Home) phone: (303) 492 4405
(303)532-9344 (Mobile)
E-mail:
Personal Information
Date of Birth: Jan 20th 1975 / Nationality: South Korea
Education
Ph. D. candidate, Accounting, Leeds School of Business, University of Colorado at Boulder, minor: Econometrics. / 2007(expected)
M.B.A., Accounting, Department of Business Administration, Seoul National University,Seoul, Korea / 2001
B.B.A., Department of Business Administration, SeoulNationalUniversity, Seoul, Korea / 1999
Research Interests
Accounting Issues Related to Information Economics and Corporate Finance such as Dividend Policy and Capital Structure; Microeconomics-based Tax Research;International Accounting
Publications and Working Papers
Guenther, D. (University of Oregon), B. C. Jung, and M. Williams (University of Oregon) (2005): ‘‘The Effect of the 2003 Dividend Tax Rate Reduction on Corporations' Cost of Capital,”Proceedings of the 2005 University of Illinois Tax Research Symposium.
This paper will be revised and submitted to The Accounting Review.
Jung, B. C., K. (Shiva) Sivaramakrishnan (University of Houston), and N. Soderstrom (University of Colorado) (2006): “Informational Effects of Regulation Fair Disclosure on Equity Analysts’ Responses to Debt Rating Changes”
Presented at the University of Colorado at Boulder Accounting Workshop;the AAA Annual Meeting
This paper will be revised and submitted to Contemporary Accounting Research
Jung, B. C. (2006): “Information asymmetry and the relations between dividend increases, risk and expected future earnings changes”(Job Market Paper)
(Committee members: Prof. Steve Rock and Prof. Phil Shane (Co-chairs), Prof. Eric Hughson, Prof. John Jacob,andProf. Naomi Soderstrom)
Work in Progress
Jung, B. C., and S. Yoon (WinonaStateUniversity): “Dividend Taxes and Capital Structure: Evidence from the 2003 Tax Act” (Status: Write-up)
Jung, B. C., S. Rock (University of Colorado), and N. Soderstrom (University of Colorado) :“Investor Uncertainty, Bond Rating Changes, and Stock Market Reaction” (Status: Write-up)
Jung, B. C.: “Dividend Payout Policy and Analyst Forecast Properties” (Status: Write-up)
Jung, B. C., K. Sivaramakrishnan (University of Houston), and N. Soderstrom (University of Colorado): “Solicited vs. Unsolicited Bond Rating: Further Evidence” (Status: Data Collection).
Guenther, D. (University of Oregon), B. C. Jung, and D. Weber (University of Connecticut): “The Effect of the 2003 Dividend Tax Rate Reduction on Corporations' Cost of Capital: Evidence from the REITs” (Status: Data Analysis).
Jung, B. C.: “Economic Benefits and Costs of Accounting Conservatism”(Status: Data Analysis)
Jacob, J (University of Colorado) and B. C. Jung: “Comparison between Defined Benefit and Defined Contribution Plans” (Status: Data Collection).
Teaching Interest
Financial accounting; Managerial accounting
Teaching Experience
Leeds School of Business, University of Colorado at Boulder, Instructor of Intermediate Financial Accounting I (Fall 2006 and Spring 2007), Undergraduate level
Leeds School of Business, University of Colorado at Boulder, Instructor of Accounting and Financial Analysis (Spring 2005), Undergraduate level; Instructor Rating: A-
LeedsSchool of Business, University of Colorado at Boulder, Teaching Assistant of Accounting and Financial Analysis (2002 and 2003)
Department of Business Administration, SoongsilUniversity, Seoul, Korea. Instructor of Introductory Financial Accounting (2002), Undergraduate level
Department of Business Administration, Seoul National University, Seoul, Korea, Teaching Assistant of Financial Accounting Theory and Introductory Financial Accounting, Undergraduate level (1999, 2000); Teaching Assistant of Business Game, Advanced Management Program (2001)
Professional Association
American Accounting Association; American Taxation Association; American Finance Association
Other Work Experience
Research Assistant, Center for Accounting Research (at SeoulNationalUniversity), Korea, 2000–2002.
Military Service in 2/9th Mechanized Infantry, Camp Casey as KATUSA (Korean Augmentation Troops to United States Army), 11/95 – 01/98.
Conference Participation
9thUniversity of Illinois Tax Research Symposium, September 2005.
Financial Accounting and Reporting Section Midyear Meeting and Doctoral Consortium: January 2005–SanDiego, California.
American Taxation Association Midyear Meeting and JATA conference: February 2004–Denver, Colorado.
Awards and Honors
Fellow, Deloitte/J. Michael Cook American Accounting Association Doctoral Consortium, June 2006 – Lake Tahoe, CA
Fellow, Pac 10 Plus Doctoral Consortium, February 2006 – Salt Lake City, UT
Recipient of Gerald Hart Summer Research Fellowship, University of Colorado at Boulder, summer 2004, and 2005
Recipient of Leeds School of Business Accounting Division Summer Research Grant, University of Colorado at Boulder, summer 2003.
Recipient of University Fellowship, University of Colorado at Boulder, Fall 2002Spring 2006.
Recipient of ILJU Academic and Cultural Research Foundation Scholarship, Seoul National University, Korea, 2001-2002
Recipient of Songwon Fellowship for Outstanding Academic Performance, Seoul National University, Korea, 1995, 1999-2000.
Recipient of Samsong Fellowship for Outstanding Academic Performance, Seoul National University, Korea, 1992 – 1994.
REFERENCES
Prof. Steve Rock
Associate Professor
University of Colorado at Boulder
LeedsSchool of Business
Boulder, CO80309-0419
303-735-5009 (Phone)
303-492-5962 (Fax)
/ Prof. Philip B. Shane
Associate Professor
University of Colorado at Boulder
LeedsSchool of Business Boulder, CO80309-0419
303-492-0423 (Phone)
303-492-5962 (Fax)
/ Prof. Naomi S. Soderstrom
Associate Professor
University of Colorado at Boulder
LeedsSchool of Business
Boulder, CO80309-0419
303-735-6620 (Phone)
303-492-5962 (Fax)

SUMMARY of PAPERS

Guenther, D. (University of Oregon), B. C. Jung, and M. Williams (University of Oregon) (2005): ‘‘The Effect of the 2003 Dividend Tax Rate Reduction on Corporations' Cost of Capital.”

Abstract: We examine changes in corporations' cost of equity capital before and after the 2003 dividend tax rate reduction. We use standard approaches to measure cost of capital, and hypothesize that: (1) the cost of capital will decrease for all firms (both dividend paying and non-dividend paying), (2) the decrease will be larger for those firms that are expected to issue new equity in the future and for those firms that tend to use dividends rather than stock repurchases to make distributions to shareholders, and (3) the decrease will be smaller for those firms that expect higher future earnings growth. Our results are consistent with our hypotheses, and are consistent with the reduction in dividend taxes affecting the cost of equity capital.

Jung, B. C., K. Sivaramakrishnan (Shiva) (University of Houston), and N. Soderstrom (University of Colorado) (2006): “Informational Effects of Regulation Fair Disclosure on Equity Analysts’ Responses to Debt Rating Changes”

Abstract: Both bond rating agencies and equity analysts evaluate public companies and report their findings and opinions to market participants. Regulation Fair Disclosure (FD) changed the dynamics of the market and placed restrictions on the information that companies could disclose to analysts. Debt rating agencies did not receive similar restrictions. This paper analyzes how the relation between changes in debt ratings and revisions in analyst forecasts changed as a result of FD. We find that following FD, analysts place a greater weight on information from bond rating agencies. We also find some support for the conjecture that informational effects of FD on analyst’s responses to bond downgrades are stronger for firms where the analysts have high information uncertainty (larger forecast dispersion and low analyst following).

Jung, B. C. (2006):“Information asymmetry and the relations between dividend increases, risk and expected future earnings changes” (Job Market Paper)

Abstract:I examine whether firms with lower analyst coverage are more likely to be misvalued and, therefore, managers have greater incentive to signal firms’ true quality by increasing dividends. This study provides three sets of findings. First, the information content of dividend increases is greater for firms covered by fewer analysts. Second, stronger stock market reactions to dividend increases by firms with lower analyst coverage are due to both: (1) a stronger association between dividend increases and future earnings changes, and (2) greater declines in Fama and French (1993) three risk factor loadings. My findings generally hold with other measures of information asymmetry. Finally, I find that prior studies mismatch the current dividend change year with the future earnings change year. After correcting, I show that dividend increases contain information regarding increases in future earnings and profitability. Overall evidence suggests that managers facing greater information asymmetry signal their ‘true worth’ through dividend changes.

Jung, B. C., and S. Yoon (WinonaStateUniversity): “Dividend Taxes and Capital Structure: Evidence from the 2003 Tax Act”

Abstract:Since the 2003 Tax Act reduces the cost of equity and does not affect the cost of debt, we hypothesize that if differential personal taxes on debt and equity are incorporated in their relative cost to the firm, this tax change should cause an overall decrease in leverage because equity capital is now relatively more attractive to corporations than it was before the 2003 Tax Act. The empirical results are consistent with this prediction.

Jung, B. C., N. Soderstrom (University of Colorado), and S. Rock (University of Colorado): “Investor Uncertainty, Bond Rating Changes, and Stock Market Reaction”

Abstract:We find another important determinant of information content of bond rating changes – investor uncertainty. Investor uncertainty, proxied by analyst forecast dispersion strongly predicts the magnitude of stock market reactions. Most of significant and strong stock market reactions are observed in bond rating changes with high analyst forecast dispersion. Our results can explain a puzzling result reported by prior studies that the stock market reacts only to bond downgrades, not bond upgrades. The level of investor uncertainty is significantly smaller prior to upgrade relative to downgrade announcements. The effect of bond upgrade announcements on stock market becomes stronger as pre-announcement investor uncertainty is higher. The results show that informativeness of bond rating change announcement is determined by information uncertainty (i.e., analyst forecast dispersion), not information quantity (i.e., the number of analyst following). We also provide evidence that bond rating change announcements resolve investor uncertainty. Reduction in investor uncertainty is significantlyrelated to the magnitude of stock market reaction around bond downgrade announcements.

Jung, B. C.: “Dividend Payout Policy and Analyst Forecast Properties”

Abstract: This paper investigates how analyst forecast properties such as accuracy, bias, and dispersion are related to dividend payout policy. First, I compare forecast properties between dividend paying firms and non-dividend paying firms and find that dividend paying firms experience better forecast properties: analyst forecasts are more accurate, less biased and less dispersed for dividend paying firms as compared to non-dividend paying firms. These results hold after controlling for well known factors which affect forecast properties, including earnings volatility, earnings surprise magnitude, an indicator for loss firms, growth, and industry competition. Second, I hypothesize that excessive dividend payouts (i.e., dividend payout ratio greater than 1) lead to worse forecast properties. Consistent with my hypothesis, I find that when the payout ratio is less than 1, higher dividend payoutsare associated with less dispersed, less biased, and more accurate earnings forecasts. Alternatively, when the payout ratio is greater than 1, higher payout ratios are associated with more dispersed, more biased, and less accurate earnings forecasts. Thus, I observe a V-shape (reverse V-shape) relation between forecast dispersion and bias (accuracy) and dividend payout ratio as the dividend payout ratio increases. In short, I find evidence that dividends proxy for a minimum level of earnings, enhancinganalyst forecast properties beyond previously identified earnings characteristics.

Jung, B. C., K. Sivaramakrishnan (University of Houston), and N. Soderstrom (University of Colorado): “Solicited vs. Unsolicited Bond Rating: Further Evidence”

In this paper, we extend prior studies and analyzewhether solicited and unsolicited bond ratings have the same information content. Our analysis includes the following questions: which bond ratings are more biased, unsolicited or solicited? Arethe solicited bond ratings more informative than the unsolicited bond ratings? How does the stock market react to solicited and unsolicited bond ratings?Do financial analysts’earnings forecasts and stock recommendations reflect difference between solicited and unsolicited bond rating?

While previous studies empirically analyze whether unsolicited ratings are biased downward, no research explores the differential information content of solicited and unsolicited rating using stock market reactions and analysts’ stock recommendations. Many papers utilize abnormal returns around rating changes to examine stock market reactions to bond rating information. However, no paper assesses the stock market reaction after separating the analysis into solicited and unsolicited ratings. In addition, we investigate therelationship between bond rating information and analysts’ stock recommendationswith consideration of a conflict of interest built in bond rating agencies’ business models.

Guenther, D. (University of Oregon), B. C. Jung, and D. Weber (University of Connecticut): “The Effect of the 2003 Dividend Tax Rate Reduction on Corporations' Cost of Capital: Evidence from the REITs”

This project is an extension of Guenther, Jung, and Williams (2005) which investigate how dividend taxes affect the cost of equity capital for U.S. public corporations using the 2003 reduction in the dividend tax rate. They hypothesize and find that the cost of equity capital decreased for all U.S. corporations after the 2003 Act. We analyze the same question with different samples, REITs. REITs (Real Estate Investment Trusts) are dividend paying U.S. corporations that are exempt from the U.S. corporate income tax provided they meet certain requirements with respect to distributions of taxable income to shareholders. REIT dividends do not qualify for the rate reduction under the 2003 Act, and are therefore not expected to have their cost of equity capital affected. We explore whether the cost of equity capital for REITs is, on average, unchanged after the 2003 Act. Furthermore, since we separate out the REIT dividends into taxable, non-taxable, and capital gains and consider an investor-specific characteristic (See Dhaliwal et al. 2005 for more details), we can provide more rigorous evidence of how the cost of equity capital changes for the REITs are related to the taxstatus of their dividends and the percentage of institutional ownership.

Jung, B. C. “The Economic Benefits and Costs of Accounting Conservatism”

Iintend to investigate the real economic effects of accounting conservatism on firm value with reference to the cost of equity capital. Specifically, I hypothesize that the economic costs and benefits of conservatism depend on firm and industry characteristics. In other words, some firms generate benefits from conservatism while others incur costs due to conservatism. Conservative accounting can reducefirm value if marginal costs of conservatism exceed marginal benefits. Based on the theory of the firm (Jensen and Meckling 1976), positive accounting theory (Watts and Zimmerman 1986), and a theoretical foundation on accounting conservatism (Watts 2003), I predict that firms with higher litigation risk, higher governance risk, greater dividend conflicts between shareholders and bondholders, higher political cost, and higher tax costs are more likely to benefit from conservatism.

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