Does the transformation to holding company systems in K orean chaebol improve the valuation independence of affiliated firms’ cost of debt?

Research output: Contribution to journalArticlepeer-review

Abstract

Family-owned conglomerates are prevalent in most Asian countries, in which excessive control rights of their majority shareholders infringe independent managements of their affiliated firms. Less than 50% of Korean chaebol conglomerates have transformed to holding company systems to ensure independent management of affiliated firms. Empirical analyses discovered that the cost of debts in the companies which have been transformed to holding company restricting the complicated equity investment among the affiliated firms of chaebol are evaluated independently. Results imply that the negative effect from the propping of internal capital can be reduced through the fundamental change in the corporate governance.

Original languageEnglish
Pages (from-to)447-457
Number of pages11
JournalCorporate Ownership and Control
Volume13
Issue number4Cont3
DOIs
Publication statusPublished - 2016

Bibliographical note

Funding Information:
This work was supported by the National Research Foundation of Korea Grant funded by the Korean Government (NRF-S2014A040300059). This work has been modified from a part of the first author?s doctoral dissertation paper

Publisher Copyright:
© 2016 Virtus Interpress. All rights reserved.

All Science Journal Classification (ASJC) codes

  • Business, Management and Accounting(all)

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