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Control-ownership disparity and stock market Predictability: Evidence from Korean chaebols

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  • Joe, Denis Yongmin
  • Oh, Frederick Dongchuhl
  • Park, Cheolbeom

Abstract

We use Korean firm-level data to examine whether the predictive ability of log dividend yields depends on the disparity between control and ownership rights. We find that dividend growth predictability via the log dividend yield grows as the disparity between control and ownership rights increases. However, we find that log dividend yields have no significant predictive power for stock returns. Our results are generally consistent with the US firm-level results in Vuolteenaho (2002) and provide a further explanation of why the predictability of log dividend yields for dividend growth differs across firms.

Suggested Citation

  • Joe, Denis Yongmin & Oh, Frederick Dongchuhl & Park, Cheolbeom, 2018. "Control-ownership disparity and stock market Predictability: Evidence from Korean chaebols," Finance Research Letters, Elsevier, vol. 27(C), pages 6-11.
    • Handle: RePEc:eee:finlet:v:27:y:2018:i:c:p:6-11
    DOI: 10.1016/j.frl.2018.01.003
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    References listed on IDEAS

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    More about this item

    Keywords

    Control-ownership disparity; Dividend yield; Dividend growth predictability; Stock return predictability;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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