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The Difference Between Measuring Internal Funds Allocations in Groups and in Diversified Firms

Author

Listed:
  • Marc Jegers

    (Micro-dconomics of the Profit and Non-Profit Sectors, Vrije Universiteit Brussel, Pleinlaan 2, B-1050 Brussel, Belgium)

  • Kooyul Jung

    (Graduate School of Finance, Korea Advanced Institute of Science and Technology, Korea)

  • Byungmo Kim

    (School of Business and Economics, Dankook University, Korea)

Abstract

Dependent variables used by Kim, Jung and Kim (2005) to assess the effect of the ownership structure of Korean chaebols on internal funds allocations area priorimisspecified in the context of their research, as they were designed to be applied when studying diversified firms and not groups consisting of legally independent entities. The conditions under which this misspecification has no effect on their conclusions are discussed. Re-analyzing their data with a more appropriate internal funds allocation variable leaves their conclusion on the presence of tunnelling effects intact, though it paints a partly different picture of internal allocations as such.

Suggested Citation

  • Marc Jegers & Kooyul Jung & Byungmo Kim, 2007. "The Difference Between Measuring Internal Funds Allocations in Groups and in Diversified Firms," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 10(03), pages 341-347.
    • Handle: RePEc:wsi:rpbfmp:v:10:y:2007:i:03:n:s0219091507001100
    DOI: 10.1142/S0219091507001100
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    Citations

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    Cited by:

    1. Mohd Mohid Rahmat & Kamran Ahmed & Gerald J. Lobo, 2020. "Related Party Transactions, Value Relevance and Informativeness of Earnings: Evidence from Four Economies in East Asia," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 23(01), pages 1-42, March.
    2. I-Ju Chen, 2016. "Corporate Governance and the Efficiency of Internal Capital Markets," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 19(02), pages 1-50, June.

    More about this item

    Keywords

    Internal capital markets; groups; funds transfers;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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