Analysis of Stock Price Volatility Spillovers and Connectedness in the Korean Interior Design Industry

The interior industry occupies an important position in the domestic construction market, but there is a lack of sufficient research on it. According to a report by the Korea Professional Construction Association (KOSCA, 2022), the total annual sales of all interior construction industries is approximately KRW 14 trillion. In order to fill the research gap, our study systematically analyzes the daily market capitalization volatility and interconnectedness among major companies in the South Korean interior design industry amid increasing economic uncertainties. Utilizing the DY spillover index and the generalized vector autoregressive (VAR) model, it investigates the information transmission and network structure among key interior-related firms from 2013 to 2024. The results reveal that material suppliers play a pivotal role as primary transmitters of volatility, occupying a central position within the network. Notably, during external shocks such as the COVID-19 pandemic and geopolitical events, the effects of volatility spillovers significantly intensified, leading to stronger intercompany interconnectedness. These findings indicate the systemic vulnerability of the Korean interior design industry to macroeconomic shocks, underscoring the necessity of risk management and strategic policy responses for the industry's stable growth. This study provides a comprehensive understanding of the structural characteristics of information flows within the interior design sector and serves as a foundational resource for systemic risk management and policy development. Future research could include structural studies (e.g., vector error correction models) of volatility spillover indices.