Frederick Dongchuhl Oh

Spillover Effects Within Business Groups: The Case of Korean Chaebols

We examine the spillover effects that occur within Korean business groups (i.e., chaebols) by focusing on the market reactions of event firms to announcements of credit rating changes. We find that there are positive spillovers (caused by positive market reactions) and negative spillovers (caused by negative market reactions) that are driven by the market reactions of event firms. Our analyses indicate that negative spillovers are more dominant than positive spillovers. Moreover, a spillover that is driven by a leading firm within a business group has stronger effects on other firms in the group than a spillover that is driven by a nonleading firm. This suggests that the market evaluation of a business group is conducted more on the basis of a leading firm than a nonleading firm within a group. Finally, we show that the spillover effects that are analyzed in our study are more noticeable when the business relationship between an event firm and other affiliated firms is closer. This paper was accepted by A...

DID FOREIGN OWNERSHIP OF KOREAN CREDIT RATING AGENCIES IMPROVE THEIR RATINGS

In this study, we investigate whether foreign equity participation fostered the growth of Koreas credit rating industry during the 2002–2013 period. We find that the rating quality deteriorated steadily even though the foreign ownership of Koreas credit rating agencies increased: Rating levels went up. Our analysis indicates that the Korean governments policy of gradually relaxing the restrictions on foreign ownership of local credit rating agencies was ineffectual. (JEL G24, F21, F65, D43)

Corporate governance structure and product market competition

Abstract This article assesses the effects of the competitive structure of a product market on a firm’s corporate governance structure. Our model demonstrates that shareholders strategically determine the corporate governance structure, including the manager’s stock ownership and his controlling power over the firm, in order to maximize their utility in the product market competition. We find that the manager’s stock ownership is lower and his controlling power over the firm is higher when the firm’s product is more profitable or when competition within the product market is more severe. The inefficiency of the wealth transfer from shareholders to the manager also affects the corporate governance structure.

Owner-managers and firm performance during the asian and global financial crises: evidence from Korea

ABSTRACT We examine the performance of the Korean owner-managers during the 1997−1998 Asian financial crisis and the 2008−2009 global financial crisis to establish whether they overcome the unexpected exterior shocks better than employed managers. We find that the owner-managers record a significantly greater performance during the crises, and especially during the latter period. Moreover, our results suggest that such a tendency comes from the owner-managers’ superior investment decisions. Our paper thus highlights the role of owner-managers by studying their performance during the Korean economic crisis periods. (JEL G01, G32, G34)

Credit ratings and corporate disclosure behaviour: evidence from regulation fair disclosure in Korea

ABSTRACT This article provides evidence that firms with high market expectations disclose more information to investors, utilizing the fair disclosure regulation in Korea to proxy for their disclosure choices. This finding is consistent with the argument that in order to retain their dominant positions, highly evaluated firms are more concerned about the market’s perception of them as providers of timely and detailed disclosure. We also find that the impact of market expectations on disclosure is more pronounced for chaebol firms. Combined with prior research on the relationship between firm performance and voluntary disclosure, we provide important implications for the determinants of corporate disclosure