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Changes in Korean Corporate Governance: A Response to Crisis

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Authors
Kim, E. Han; Kim, Woochan
Issue Date
2008
Publisher
BK 21 law
Citation
Journal of Korean Law, Vol.8 No.2, pp. 23-46
Abstract
A decade has passed since the outbreak of the Korean financial crisis in November 1997. One of the fundamental causes of the crisis was widespread corporate value destruction, especially among the family-controlled business groups known as chaebol. Before the crisis, these business groups routinely pursued growth and market share at the expense of profitability and shareholder value. For some of the chaebol, size added to their political influence, which could be used to tilt the playing field in their favor. Being bigger also meant better access to external financing and lower borrowing costs, thanks in part to the “too big to fail” legacy. But another important factor driving this value-destroying growth was the so-called “private benefits” of controlling a larger corporate empire to the controlling

shareholders, typically referred to in Korea as the “owners.” In addition to the consumption of perks, the chaebols’ “owners” commonly used “tunneling” and “asset-grabbing” schemes to transfer corporate value from their minority shareholders.
ISSN
1598-1681
Language
English
URI
http://hdl.handle.net/10371/85140
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College of Law/Law School (법과대학/대학원)The Law Research Institute (법학연구소) Journal of Korean LawJournal of Korean Law Volume 08 Number 1/2 (2008)
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