Evaluating the Post-Crisis Corporate Restructuring in Korea

Abstract

This paper assesses Korea's corporate reform programme implemented after the financial crisis in 1997. After critically reviewing the economic analyses that in formed the corporate reform programme, we look at the key corporate reform measures, especially those related to the chaebols in some detail. We look at the reduction in debt-equity ratio, the 'Big Deals, the 'Workout Programme, and the measures that are intended to improve corporate governance, such as the changes in fair trading regulation, accounting standards, financial regulation, and the internal governance system. We argue that, while the post- crisis reform programme has introduced some positive elements, it has been implemented at substantial costs and furthermore reduced the long-run dynamism of the economy by negatively affecting the corporate financing system.