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Business group heterogeneity and firm outcomes: Evidence from Korean chaebols

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This paper examines the impact of business group affiliation on the performance and corporate policies of Korean listed firms over the period 2007-2019. This study proposes a novel approach allowing the observation of heterogeneity in the affiliation effects. Overall, we conclude that business group characteristics are reflected in firm outcomes. We find that investors perceive group membership positively as they pay a premium to hold affiliated firms. The premium is related to profitability and size of business groups, consistent with resource based theories. The analysis also identifies significant group specific effects on firm policies. These findings suggest that several business groups follow group-level strategies and apply homogeneous financial and investment policies to all their affiliates.

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  • Ducret, Romain & Isakov, DuÅ¡an, 2023. "Business group heterogeneity and firm outcomes: Evidence from Korean chaebols," FSES Working Papers 531, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
    • Handle: RePEc:fri:fribow:fribow00531
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    More about this item

    Keywords

    Business groups; performance; financing policies; investment; Korea;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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