Asian Review of Financial Research

pISSN: 1229-0351
eISSN: 2713-6531

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Asian Review of Financial Research Vol.19 No.1 pp.187-230
The Choice of Group Structure: Divide and Rule
Hyung Cheol Kang1†
1 한국증권연구원 연구위원
Kyung Suh Park1†
1 고려대학교 경영대학 교수
Hasung Jang1†
1 고려대학교 경영대학 교수
Key Words : 기업집단; 그룹구조; 출자; 피라미드 소유구조; 지배권; 소유권(현금권); 내부자본시장; Tunneling; Propping


This paper concerns the structure of Korean business groups. We investigate the factors that affect a controlling shareholder's decision regarding the structure of his business group using financial and ownership data on conglomerate groups in Korea. We define new measures that represent the levels of vertical and circuitous structures of a group. We empirically confirm that controlling shareholders strategically choose the structure of their business groups to secure control over the groups and to seek private benefit of control. The risk diversification and propping incentive of controlling shareholders is also found to affect the decisions.
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