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

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.