Characteristics and Economic Efficiency of the Venture Companies in Korea : Comparison with the Chaebols and Other Traditional Firms

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Lee, Keun; Kim, Sungsoo
Issue Date
Seoul Journal of Economics
Seoul Journal of Economics 13 (No. 3 2000): 335-360
VenturesChaebolsProductive EfficiencyStochastic Production Function
This paper focuses on the emergence of a new style of firms in the Korean economy, so-called venture companies, and provides a comparative analysis of the behavior and economic efficiency of the venture companies relative to chaebols and other old firm s listed in the Korea Stock Exchange. The paper employs an econometric technique to compare the productive efficiency of ventures, chaebols and non-chaebol firms in Korea, using panel data covering the 1996-9 period. The paper finds that the average level of productive efficiency of the ventures is the highest among the four types of firms compared, such as chaebols and non-chaebols in the KSE, and non-ventures in the Kosdaq market. The efficiency comparison suggests the following order of efficiency among the four subgroups of firms from the best to the worst; ventures, non-ventures, non-chaebols, and chaebols. The paper also finds that the estimated productive efficiency is an important determinant of profitability. When we control for productive efficiency, the capital-labor ratio, the debt-equity ratio, and asset growth, ventures' profitability is shown to be significantly higher than that of others firms.
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College of Social Sciences (사회과학대학)Institute of Economics Research (경제연구소)Seoul Journal of EconomicsSeoul Journal of Economics vol.13(3) (Fall 2000)
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