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http://dx.doi.org/10.7737/JKORMS.2014.39.4.097

A Heuristic Method for Resolving Circular Shareholding with the Objective of Voting Rights Maximization  

Park, Chan-Kyoo (School of Business, Dongguk University at Seoul)
Publication Information
Journal of the Korean Operations Research and Management Science Society / v.39, no.4, 2014 , pp. 97-113 More about this Journal
Abstract
Circular shareholding refers to a situation where at least three member firms in a business group have stock in other member firms and establish a series of ownership in a circular way. Although many studies have focused on the ultimate effect of circular shareholding on firm's value and profitability, there have been few studies which address how to resolve circular shareholding from the perspective of optimization theory. This paper proposes a heuristic method for identifying shareholdings which need to be cleared in order to settle the problem of circular shareholding in a business group. The proposed heuristic tries to maximize the sum of voting rights the controlling family has in its business group firms. The applications results confirm that the heuristic provides near-optimal solutions for most of 16 Korean large business groups involving circular shareholding.
Keywords
Circular Shareholding; Business Group; Optimization Model; Voting Rights; Heuristic Method;
Citations & Related Records
Times Cited By KSCI : 2  (Citation Analysis)
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