Firm behavior and group affiliation: The strategic role of corporate grouping for Korean firms

Choi, Jeongpyo; Cowing, Thomas G.

doi:10.1016/s1049-0078(99)00014-7

Cited by 75 publications

(24 citation statements)

References 4 publications

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“…The examination of group affiliated listed subsidiaries is the approach used by the majority of empirical studies (see e.g., Hoshi et al, 1991;Choi and Cowing, 1999). We focus on listed firms (rather than private firms) because of the more reliable accounting data and additional share price measures available.…”

Section: Methodology and Datamentioning

confidence: 99%

“…If group affiliation improves performance, we expect national champion listed affiliates to outperform all other listed firms including both listed subsidiaries of other business (non-national champion) groups and independent listed firms. Again, previous studies have also employed this approach, focusing on whether listed firms are members or not of only the largest business groups (Choi and Cowing, 1999). Unfortunately, it is not possible to compare the performance of member firms before and after their affiliation to national champion groups because it is hard to estimate precisely when particular groups became national champions, 1 and because listing of group subsidiaries often followed selection of the parent group as a national champion.…”

Section: Methodology and Datamentioning

confidence: 99%

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The impact of business group affiliation on performance: evidence from China's 'national champions'

Guest¹,

Sutherland²

2009

Cambridge Journal of Economics

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An important aspect of China's economic reforms has been an ambitious policy to develop a 100 or so large, internationally competitive business groups. Very little is known about these national champion groups or the benefits to subsidiary firms of belonging to them. This study, building from insights and methods used in existing literature, examines the performance of subsidiaries affiliated to China's national champion groups. Our results find that they perform comparatively well. We discuss possible reasons for this finding and comment more generally on the important role that business groups now play in China's reform and development.

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Section: Methodology and Datamentioning

confidence: 99%

Section: Methodology and Datamentioning

confidence: 99%

The impact of business group affiliation on performance: evidence from China's 'national champions'

Guest¹,

Sutherland²

2009

Cambridge Journal of Economics

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“…Their empirical results imply that business group affiliation in the manufacturing sector improves firm profitability. Choi and Cowing (1999) analyze the linkage between business group affiliation and performance of firm using a sample of 252 Korean publicly listed quoted firms (i.e., 91 group firms and 161 non-group firms) from manufacturing sector for the period between 1985 and 1993. In their analysis, the research is conducted for each of years separately and various subperiods.…”

Section: Review Of Related Studiesmentioning

confidence: 99%

“…This finding is supported by Keister (1998) for China, Khanna and Palepu (2000a) for Chile, Ghosh (2010) for India, Cheong et al (2010) for Korea, Khanna and Rivkin (2001) for Taiwan, India, and Indonesia, and Chakrabarti et al (2007) for Thailand, Indonesia, and Singapore. However, Choi and Cowing (1999) report that group membership in Korea in general leads to a worse performance with regards to group firms. Similar results are reported by Khanna and Rivkin (2001) for Argentina, George and Kabir (2008) for India, Gohar and Karacaer (2009) for Pakistan, Hernández-Trasobares and Galve-Górriz (2017) for Spanish.…”

Section: Introductionmentioning

confidence: 99%

Does Family Business Group Affiliation In Real Sector Firms Really Affect Their Performance?

Işık¹

2017

ASSRJ

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In this study, we empirically examine the performance effect of group affiliation by comparing the performance of firms that belong to family business groups with the performance of independent firms. For this purpose, we use a sample of 193 Turkish firms (i.e. 90 group affiliated firms and 103 non-group firms) quoted on the Istanbul Stock Exchange (Borsa Istanbul) during the 2005-2012 period. Based on ROA and Tobin's Q performance measures, the findings obtained from the FEVD estimator reveal that group membership does not always positively affect the financial performance of member firms. There exists a threshold effect of group affiliation, i.e. big group firms are better performers than both small group firms and stand-alone firms. Furthermore, when taken into account of firms' age, we find that positive effect of group affiliation is only valid for old group affiliated firms.

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“…A few static partial equilibrium studies suggest that the agency costs structure of businesses in emerging countries prompts them to pursue aggressive investment policies (see, e.g., Bebchuk, Kraakman and Triantis, 1999; Lee, 2000). Indeed, several empirical studies Önd that in middle-income countries business group a¢liates exhibit higher investment and growth rates than normal (see, e.g., Campbell andKeys, 2002, andChoi andCowing, 1999), while the evidence about their relative proÖtability is generally ambiguous (see, e.g., Khanna andPalepu, 2000, andBertrand, Metha andMullainathan, 2002 …”

Section: Prior Literaturementioning

confidence: 99%

Financial Markets, Industry Dynamics, and Growth

2014

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We study the impact of corporate governance frictions in an economy where growth is driven both by the foundation of new Örms and by the in-house investment of incumbent Örms. Firmsí managers engage in tunneling and empire building activities. Active shareholders monitor managers, but can shirk on their monitoring, to the detriment of minority (passive) shareholders. The analysis reveals that these conáicts among Örmsí stakeholders inhibit the entry of new Örms, thereby increasing market concentration. Despite depressing investment returns in the short run, the frictions can however lead incumbents to invest more aggressively in the long run to exploit the concentrated market structure. Financial Markets, Industry Dynamics, and Growth AbstractWe study the impact of corporate governance frictions in an economy where growth is driven both by the foundation of new Örms and by the in-house investment of incumbent Örms. Firmsí managers engage in tunneling and empire building activities. Active shareholders monitor managers, but can shirk on their monitoring, to the detriment of minority (passive) shareholders. The analysis reveals that these conáicts among Örmsí stakeholders inhibit the entry of new Örms, thereby increasing market concentration. Despite depressing investment returns in the short run, the frictions can however lead incumbents to invest more aggressively in the long run to exploit the concentrated market structure. By means of quantitative analysis, we characterize conditions under which corporate governance reforms boost or reduce welfare.

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Firm behavior and group affiliation: The strategic role of corporate grouping for Korean firms

Cited by 75 publications

References 4 publications

The impact of business group affiliation on performance: evidence from China's 'national champions'

The impact of business group affiliation on performance: evidence from China's 'national champions'

Does Family Business Group Affiliation In Real Sector Firms Really Affect Their Performance?

Financial Markets, Industry Dynamics, and Growth

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