Asian Review of Financial Research Vol.24 No.3 pp.909-951
A Survey of the Korean Literature on Corporate Governance
Key Words : Corporate Governance,Agency Cost,Market Discipline,Internal Market,Tunneling
Finance is unique in that researchers question even the integrity of managers. Researchers in other disciplines in management sciences consider managers to be agents with good intentions. They focus on supplying good instruments for managers to put into practice, failing to question the intent of managers. But researchers in corporate finance equipped with agency theory question the more fundamental problems and ask what if managers are bad or if managers are plagued with agency problems? These kinds of questions are the topics of corporate governance. Researchers in corporate finance who have a way of seeing things differently have brought and will bring many spectacular achievements in both the academic and practical world. This paper reviews the empirical literature on the corporate governance issues in the Korean capital market setting, where corporate governance issues are important because Korea's chaebols, family-owned conglomerates, are blamed for minority shareholder expropriation via unlawful inheritances and accounting fraud with all the success in international markets. This survey focuses on the effectiveness of internal governance and external markets to monitor and control managers. The topics covered in the following four sections are: (1) The effect of corporate governance structure on corporate policy, (2) Corporate governance and firm value, (3) Market discipline, and (4) Determinants of governance structure. Finally, the discussion and conclusion are presented in the last section.