We examine the effect of business group membership on firm value in each pre-and postcrisis Korea. Consistent with prior studies, results show that group affiliated chaebol firms suffer value discount relative to non-chaebol firms in the precrisis period. However, we also find that chaebol firms experience an improvement in firm value relative to non-chaebol firms after the financial crisis. These findings imply that the value discount of business groups reported in prior studies is not an inevitable consequence of diversification, but can be alleviated or overcome by structural reforms in business practices or economic conditions.
Asian financial crisis, business group, Chaebol, Diversification, firm value
Asian Studies | Finance and Financial Management
Corporate Reporting and Disclosure
Hitotsubashi Journal of Economics
CHANG, James Jinho; CHO, Young Jun; KANG, Won; and SHIN, Hyun-Han.
Value discount of business groups surrounding the asian financial crisis: Evidence from korean chaebols. (2007). Hitotsubashi Journal of Economics. 48, (2), 159-184. Research Collection School Of Accountancy.
Available at: http://ink.library.smu.edu.sg/soa_research/1573
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