The Difference Between Measuring Internal Funds Allocations in Groups and in Diversified Firms

Marc Jegers (), Kooyul Jung and Byungmo Kim
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Marc Jegers: Micro-dconomics of the Profit and Non-Profit Sectors, Vrije Universiteit Brussel, Pleinlaan 2, B-1050 Brussel, Belgium
Kooyul Jung: Graduate School of Finance, Korea Advanced Institute of Science and Technology, Korea
Byungmo Kim: School of Business and Economics, Dankook University, Korea

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2007, vol. 10, issue 03, 341-347

Abstract: Dependent variables used by Kim, Jung and Kim (2005) to assess the effect of the ownership structure of Korean chaebols on internal funds allocations area priorimisspecified in the context of their research, as they were designed to be applied when studying diversified firms and not groups consisting of legally independent entities. The conditions under which this misspecification has no effect on their conclusions are discussed. Re-analyzing their data with a more appropriate internal funds allocation variable leaves their conclusion on the presence of tunnelling effects intact, though it paints a partly different picture of internal allocations as such.

Keywords: Internal capital markets; groups; funds transfers (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (2)

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DOI: 10.1142/S0219091507001100

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