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

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  • James Jinho Chang

    (Yonsei School of Business, Yonsei University.)

  • Hyun-Han Shin

    (Yonsei School of Business, Yonsei University.)

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. Copyright (c) 2006 The Authors; Journal compilation (c) 2006 Blackwell Publishing Ltd.

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
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    Cited by:

    1. 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.
    2. repec:eee:worbus:v:53:y:2018:i:2:p:134-150 is not listed on IDEAS
    3. 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.
    4. ., 2010. "Recent Evolution of the Business Sector: Chaebols and SMEs," Chapters,in: The Korean Economy in Transition, chapter 8 Edward Elgar Publishing.
    5. 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.

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