Controlling shareholders' value, long-run firm value and short-term performance

Kang, Hyung Cheol; Anderson, Robert M.; Eom, Kyong Shik; Kang, Sang Koo

doi:10.1016/j.jcorpfin.2017.01.013

Cited by 37 publications

(49 citation statements)

References 35 publications

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“…This result suggests that the choice regarding the amount of risk to be taken by each affiliate can be determined by the amount of the controlling shareholder’s wealth that is invested in the affiliate. These results are also robust to including various controls suggested in the literature (Faccio et al , ; Boubakri et al , ; Kang et al , ).…”

Section: Introductionsupporting

confidence: 73%

“…The KFTC defines a business group or chaebol as “a group of companies, more than 30% of whose shares are held by the same individuals or by companies controlled by those individuals.” We use the data of business groups the KFTC publishes annually to calculate our key measure. We follow Kang et al () in dropping certain groups designated by the KFTC that are either owned by the government or have no controlling shareholder. Thus, our sample consists of affiliates of designated Korean business groups in which a chongsu is the controlling shareholder over the period from 2001 to 2011.…”

Section: Sample Selection and Datamentioning

confidence: 99%

“…Prior to calculating the CSV , we measure the controlling shareholder’s cash flow right ( CFR ), as in Kang et al (). According to Kim (), Kim et al (), and Kang et al (), CFR includes indirect ownership and direct ownership of controlling shareholders. For an affiliate i , the controlling shareholder’s direct ownership (

f_{i}

) consists of the sum of family ownership, where the family ownership includes what the controlling shareholders and their family members, non‐profit organizations, and non‐family executives own.…”

Section: Sample Selection and Datamentioning

confidence: 99%

“…OPNI also provides the intra-group shareholding matrix among affiliates. Prior to calculating the CSV, we measure the controlling shareholder's cash flow right (CFR), as in Kang et al (2017). According to Kim (2000), Kim et al (2007), and Kang et al (2017), CFR includes indirect ownership and direct ownership of controlling shareholders.…”

Section: The Csv Variablementioning

confidence: 99%

“…To address this concern, which is faced by many studies in the ownership field, we employ a fixed effects vector decomposition (FEVD) model, as in Pl€ umper and Troeger (2007). Another issue is that the results 3 Kang et al (2017) argue that CSV contrasts with the commonly used ownership variable, Cash Flow Right (CFR), measured as the percentage of an affiliate's shares owned by the controlling shareholder. For example, a controlling shareholder of a business group owns 100 and 10 shares of two affiliates, A and B, respectively, the outstanding shares in which are 200 and 100, and prices are $1 and $100.…”

Section: Introductionmentioning

confidence: 99%

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Controlling Families’ Risk Allocation in a Business Group

Chae

Kang

Lee

et al. 2020

Asia-Pac J of Fin Stud

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This paper explores family business groups and their motivation for risk taking in each affiliate. We study whether the controlling family determines the level of risk taken by an affiliate in its business group based on the amount of family wealth that is invested in the affiliate. We find that the affiliates in which the controlling family has more (less) investment take less (more) risk. Our results indicate that the controlling family decides the riskiness of each affiliate based on the family’s interests at both the firm level and the business‐group level.

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Section: Introductionsupporting

confidence: 73%

Section: Sample Selection and Datamentioning

confidence: 99%

f_{i}

Section: Sample Selection and Datamentioning

confidence: 99%

Section: The Csv Variablementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Controlling Families’ Risk Allocation in a Business Group

Chae

Kang

Lee

et al. 2020

Asia-Pac J of Fin Stud

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CSR decoupling within business groups and the risk of perceived greenwashing

Bothello

Ioannou

Porumb

et al. 2023

Strategic Management Journal

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Research SummaryGiven the growing legitimacy of corporate social responsibility (CSR), many firms engage in symbolic communication to showcase CSR without undertaking commensurate substantive actions. This “CSR decoupling” can create a risk of perceived greenwashing, which, in turn, may negatively affect a firm's performance. In this study, we explore an unexamined antecedent of decoupling: interfirm affiliation. Specifically, we use the structure of Business Groups (BGs) to investigate CSR decoupling across rather than within firms. We find that apex firms within a group are more likely to engage in CSR decoupling compared with non‐apex firms and, importantly, are partially shielded from greenwashing perceptions by the market. Our research contributes to the literatures on decoupling, perceived greenwashing, and the role of BGs and their CSR practices.Managerial SummaryCompanies that engage in symbolic communication about corporate social responsibility (CSR) without substantive actions risk being perceived as “greenwashers,” a perception that harms firm performance. Our study demonstrates how, in certain contexts where firms are affiliated with others, this may not occur. For instance, apex firms within Business Groups (BGs)—where firms are interconnected through equity and social relationships—can report on the CSR actions of non‐apex affiliates without providing commensurate substantive actions of their own. Importantly, the control and coordination abilities of these apex firms protect them from greenwashing perceptions. This study, therefore, demonstrates the role of BGs in shaping CSR practices and provides insights for managers to understand the potential risks and benefits of affiliations within BGs.

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Introduction to the Corporate Innovation Management

Rangone

2019

Contributions to Management Science

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Controlling shareholders' value, long-run firm value and short-term performance

Cited by 37 publications

References 35 publications

Controlling Families’ Risk Allocation in a Business Group

Controlling Families’ Risk Allocation in a Business Group

CSR decoupling within business groups and the risk of perceived greenwashing

Introduction to the Corporate Innovation Management

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