Browse > Article
http://dx.doi.org/10.13106/jafeb.2021.vol8.no5.0749

The Relationship between Ownership Control Disparity and Firm Value: Empirical Evidence from High-Technology Firms in Korea  

KIM, Su-In (College of Business Management, Hongik University)
SHIN, Hyejeong (School of Business, Pusan National University)
Publication Information
The Journal of Asian Finance, Economics and Business / v.8, no.5, 2021 , pp. 749-759 More about this Journal
Abstract
We investigate the relationship between ownership control disparity and future firm value in high-technology industries, and whether the effect of ownership control disparity on future firm value is differentiated when high-tech industry firms belong to chaebol groups. Using 11,848 firm-year observations of Korean firms listed on the stock market from 2006 to 2019, we employ univariate analysis and Heckman 2 stage analysis to test our hypotheses. We define high-technology industries as ICT industries based on the Korean Standard Industrial Classification. We measure future firm value using average Tobin's q for the next three years and ownership control disparity using the shareholding ratio of affiliated companies. Our univariate test results show that mean of Tobin's q is higher in ICT firms than non-ICT firms and firms largely owned by affiliates. In multivariate test, we find that the ICT firms with higher ownership control disparity are positively associated with future firm value. However, this association is lessened when firms belong to a chaebol group. Based on our findings, we suggest ownership control disparity has an additional positive effect on future firm in high-technology industries. The negative impact of chaebol groups on the association suggests the possibility of diversification discount in business group.
Keywords
Ownership Control Disparity; High Technology Industry; Firm Value; Chaebol;
Citations & Related Records
Times Cited By KSCI : 1  (Citation Analysis)
연도 인용수 순위
1 La Porta, R., Lopez-de Silanes, F., & Shleifer, A. (1999). Corporate ownership around the world. Journal of Finance, 54(2), 471v517. https://doi.org/10.1111/0022-1082.00115   DOI
2 Leland, H. E., & Pyle, D. H. (1977). Informational asymmetries, financial structure, and financial intermediation. The Journal of Finance, 32(2), 371-387. https://doi.org/10.2307/2326770   DOI
3 Masulis, R., Wang, C., & Xie, F. (2009). Agency problems at dual class companies. The Journal of Finance, 64(4), 1967-1727. https://doi.org/10.1111/j.1540-6261.2009.01477.x   DOI
4 Meyer, M., Milgrom, P., & Roberts, J. (1992). Organizational prospects, influence costs, and ownership changes. Journal of Economics and Management Strategy, 1, 9-35. https://doi.org/10.1111/j.1430-9134.1992.00009.x   DOI
5 Pittman, J. A., & Fortin, S. (2004). Auditor choice and the cost of debt capital for newly public firms. Journal of Accounting and Economics, 37(1), 113-136. https://doi.org/10.1016/j.jacceco.2003.06.005   DOI
6 Polwitoon, S., & Tawatnuntachai, O. (2020). Revisiting managerial ownership and firm value in the absence of market forces: evidence from Singapore and Thailand. Journal of Asian Finance, Economics and Business, 7(8), 1-13. https://doi.org/10.13106/jafeb.2020.vol7.no8.001   DOI
7 Rajan, R., Servaes, H., & Zingales, L. (2000). The diversification discount and inefficient investment. Journal of Finance, 55, 35-80. https://doi.org/10.1111/0022-1082.00200   DOI
8 Seo, J. (2006). Agency cost theory and the Korean Chaebol's corporate governance. Korean Journal of Law and Economics, 3(1), 33-49.
9 Seo, Y. M. (2017). The effect of control-ownership disparity on tax avoidance. Korean Journal of Business Administration, 30(4), 559-578.
10 Bae, K. H., Kang, J. K., & Kim J. M. (2002). Tunneling or value added? Evidence from mergers by Korean business groups. Journal of Finance, 57, 2695-2740. https://doi.org/10.1111/1540-6261.00510   DOI
11 Bertrand, M., & Schoar. A. (2006). The role of family in family firms. Journal of Economic Perspectives, 20(2), 73-96.   DOI
12 Byun J. H. (2018). Korean business group and innovation company: NAVER case. The Review of Eurasian Studies, 15(3), 155-173.   DOI
13 Chung H. (2015). R&D investment types and financial constraints: Comparison of ICT firms and non-ICT firms by dynamic panel analysis. Journal of Industrial Economics and Business, 28(4), 1413-1445.
14 Claessens, S., Djankov, S., & Lang, L. H. (2000). The separation of ownership and control in East Asian corporations. Journal of Financial Economics, 58(1-2), 81-112. https://doi.org/10.1016/S0304-405X(00)00067-2   DOI
15 Fama, E. F., & French, K. R. (1992). The cross-section of expected stock returns. The Journal of Finance, 47(2), 427-465. https://doi.org/10.1111/j.1540-6261.1992.tb04398.x   DOI
16 Fama, E. F., & French. K. R. (1993). Common risk factors in the returns on stocks and bonds. Journal of Financial Economics, 33(1), 3-56. https://doi.org/10.1016/0304-405X(93)90023-5n   DOI
17 Ferris, S. P., Kim, K. A., & Kitsabunnarat, P. (2003). The costs (and benefits?) of diversified business groups: The case of Korean chaebols. Journal of Banking & Finance, 27(2), 251-273. https://doi.org/10.1016/S0378-4266(01)00248-5   DOI
18 Fan, J. & Wong, T. J. (2002). Corporate ownership structure and the informativeness of accounting earnings in East Asia. Journal of Accounting and Economics, 33(3), 401-425. https://doi.org/10.1016/S0165-4101(02)00047-2   DOI
19 Shin, S. H. (2016). The policy and alternatives of Corporate Governance. The Journal of Comparative Private Law, 23(4), 1411-1422.
20 Stein, J. C. (1997). Internal capital markets and the competition for corporate resources. Journal of Finance, 52, 111-133. https://doi.org/10.1111/j.1540-6261.1997.tb03810.x   DOI
21 Gupta, V. & Singh, S. (2015). Leadership and creative performance behaviors in R&D laboratories: Examining the mediating role of justice perceptions. Journal of Leadership & Organizational Studies, 22(1), 21-36. https://doi.org/10.1177/1548051813517002   DOI
22 Hall, B. H. (2010). The financing of innovative firms. Review of Economics and Institutions, 1(1), 1-30. https://doi.org/10.5202/rei.v1i1.4   DOI
23 Kanthapanit, C., & Kanthapanit, C. (2020) Protection of minority shareholder investment in the small and medium-sized enterprises. Journal of Asian Finance, Economics and Business, 7(8), 451-459. https://doi.org/10.13106/jafeb.2020.vol7.no8.451   DOI
24 Han, S. H., Kang, K., & Shin, Y. S. (2016). Bond ratings, corporate governance, and cost of debt: The case of Korea. Journal of Asian Finance, Economics and Business, 3(3), 5-15. https://doi.org/10.13106/jafeb.2016.vol3.no3.5   DOI
25 Howell, J. W. (2017). The survival of the US dual class share structure. Journal of Corporate Finance, 44, 440-450. https://doi: 10.1016/j.jcorpfin.2014.07.006   DOI
26 Hwang, K.-H., & Park, H.-S. (2015). The effects of CEO's transformational leadership on members' innovative behavior and organizational citizenship behavior in the ICT Industry: The mediating effects of self-efficacy. Journal of Digital Convergence, 13(7), 147-161. https://doi:10.14400/JDC.2015.13.7.147   DOI
27 Kim, J. B. & Yi, C. H. (2006). Ownership structure, business group affiliation, listing status and earnings management: Evidence from Korea. Contemporary Accounting Research, 23, 427-464. https://doi.org/10.1506/7T5B-72FV-MHJV-E697   DOI