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Changes in Korean Corporate Governance: A Response to Crisis

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  • E. Han Kim
  • Woochan Kim

Abstract

In the last months of 1997, the value of the Korean currency lost over half its value against the dollar, and the ruling party was swept from power in presidential elections. One of the fundamental causes of this national economic crisis was the widespread failure of Korean companies to earn their cost of capital, which contributed to massive shareholder losses and calls for corporate governance reform. Among the worst performers, and hence the main targets of governance reform, were family-controlled Korean business groups known as "chaebol." Besides pursuing growth and size at the expense of value, such groups were notorious for expropriating minority shareholders through "tunneling" activities and other means. Copyright (c) 2008 Morgan Stanley.

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  • E. Han Kim & Woochan Kim, 2008. "Changes in Korean Corporate Governance: A Response to Crisis," Journal of Applied Corporate Finance, Morgan Stanley, vol. 20(1), pages 47-58.
  • Handle: RePEc:bla:jacrfn:v:20:y:2008:i:1:p:47-58
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    Cited by:

    1. Min, Byung S. & Smyth, Russell, 2014. "Corporate governance, globalization and firm productivity," Journal of World Business, Elsevier, vol. 49(3), pages 372-385.
    2. Bereskin, Frederick L. & Kim, Bushik & Oh, Frederick Dongchuhl, 2015. "Do credit rating concerns lead to better corporate governance? Evidence from Korea," Pacific-Basin Finance Journal, Elsevier, vol. 35(PB), pages 592-608.
    3. Martin Dierker & Jung-Wook Kim & Jason Lee & Randall Morck, 2016. "Investors’ Interacting Demand and Supply Curves for Common Stocks," Review of Finance, European Finance Association, vol. 20(4), pages 1517-1547.
    4. Jung-Wook Kim & Jason Lee & Randall Morck, 2009. "Characteristics of Observed Limit Order Demand and Supply Schedules for Individual Stocks," NBER Working Papers 14733, National Bureau of Economic Research, Inc.
    5. Hung-bin Ding & Kuntara Pukthuanthong, 2013. "Legitimacy signals and family IPO performances," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 14(1), pages 156-181, February.
    6. Sanghoon Lee, 2008. "Ownership Structure and Financial Performance: Evidence from Panel Data of South Korea," Working Paper Series, Department of Economics, University of Utah 2008_17, University of Utah, Department of Economics.

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