The Management Characteristics of Korean Chaebols vs. non-Chaebols: Differences in Leverage and its Ramifications: Myth or Reality?

Kim Hanjoon () and Berger Paul D.
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Kim Hanjoon: College of Economics and Business Administration, Cheongju University, 36 Naedok-Dong, Sangdang-Gu, Cheongju

Advances In Management, 2009, vol. 2, issue 11

Abstract: The study investigates two prolonged controversial issues concerning Korean Chaebols vs. non-Chaebols. The Korean Chaebol can be thought of in a macro sense, as similar to the Japanese Keiretsu, although there are several differences as well. One of the issues investigated is whether firms belonging to the Chaebol in Korea have different market-value-based debt ratios (i.e. higher “leverage”) than their counterparts not belonging to the Chaebol. If this is so, there are several managerial implications. Results indicate that for the period studied, firms in the Chaebol did have a higher mean leverage than their counterparts. The other issue addressed used logistic regression analysis to determine that firms belonging to the Chaebol appeared to possess different levels of the characteristics in comparison with firms not belonging to the Chaebol: larger size measured by total sales, higher sales growth rate, lower profitability and lower business risk (although the latter difference was not statistically significant, only directional). Few studies have focused systematically on these issues. Domestic policy-makers implementing managerial policies in Korea or many other developing nations may take into account the results of this study to prevent or minimize unanticipated mismanagement leading to financial turmoil.

Date: 2009

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Persistent link: http://EconPapers.repec.org/RePEc:mgn:journl:v:2:y:2009:i:11:a:3

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