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Governance System Effectiveness Following the Crisis: the case of Korean business group headquarters

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  • James Jinho Chang
  • Hyun‐Han Shin

Abstract

Various corporate governance initiatives were adopted in Korea following a major corporate governance failure, identified as a direct cause of the Asian Financial Crisis of 1997–1998. Our findings indicate that, before the crisis, the likelihood of replacing poorly performing CEOs was not related to business group (chaebol) affiliation. However, after the Asian Financial Crisis, we find CEO turnover sensitivity to performance is greater in chaebol firms than in stand‐alone firms. These findings indicated improved monitoring following reforms initiated by the Korean government, NGOs and other capital market participants. These findings have implications for the effectiveness of corporate governance in US firms following governance restructuring imposed by the SEC, the government and various market participants.

Suggested Citation

  • James Jinho Chang & Hyun‐Han Shin, 2006. "Governance System Effectiveness Following the Crisis: the case of Korean business group headquarters," Corporate Governance: An International Review, Wiley Blackwell, vol. 14(2), pages 85-97, March.
  • Handle: RePEc:bla:corgov:v:14:y:2006:i:2:p:85-97
    DOI: 10.1111/j.1467-8683.2006.00489.x
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    Cited by:

    1. Holmes, R. Michael & Hoskisson, Robert E. & Kim, Hicheon & Wan, William P. & Holcomb, Tim R., 2018. "International strategy and business groups: A review and future research agenda," Journal of World Business, Elsevier, vol. 53(2), pages 134-150.
    2. Chen, I-Ju, 2014. "Financial crisis and the dynamics of corporate governance: Evidence from Taiwan's listed firms," International Review of Economics & Finance, Elsevier, vol. 32(C), pages 3-28.
    3. Jong-Seo Choi & Young-Min Kwak & Chongwoo Choe, 2014. "Earnings Management Surrounding CEO Turnover: Evidence from Korea," Abacus, Accounting Foundation, University of Sydney, vol. 50(1), pages 25-55, March.
    4. Park, Jong-Hun & Kim, Changsu & Sung, Yun-Dal, 2014. "Whom to dismiss? CEO celebrity and management dismissal," Journal of Business Research, Elsevier, vol. 67(11), pages 2346-2355.
    5. Xiaowei Rose Luo & Chi-Nien Chung, 2013. "Filling or Abusing the Institutional Void? Ownership and Management Control of Public Family Businesses in an Emerging Market," Organization Science, INFORMS, vol. 24(2), pages 591-613, April.
    6. ., 2010. "Recent Evolution of the Business Sector: Chaebols and SMEs," Chapters, in: The Korean Economy in Transition, chapter 8, Edward Elgar Publishing.
    7. Hongbok Lee & Kwangwoo Park, 2018. "Advances in the corporate finance literature: a survey of recent studies on Korea," Managerial Finance, Emerald Group Publishing, vol. 44(1), pages 5-25, January.

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