Intragroup Transactions, Corporate Governance, and Corporate Philanthropy in Korean Business Groups

Won-Yong Oh (), Young Kyun Chang (), Gyeonghwan Lee () and Jeongil Seo ()
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Won-Yong Oh: University of Nevada, Las Vegas
Young Kyun Chang: Sogang University
Gyeonghwan Lee: Sogang University
Jeongil Seo: Sogang University

Journal of Business Ethics, 2018, vol. 153, issue 4, No 7, 1049 pages

Abstract: Abstract This study examines how the corporate philanthropy decisions of group-affiliated firms in Korea (Chaebol firms) are made. Based on the attention-based view, we argue that when corporate decision makers at group-affiliated firms focus their attention more (less) on internal markets than external stakeholders because of the firm’s high (low) reliance on intragroup transactions, the firm will decrease (increase) its level of corporate philanthropy. We further argue that the relationship will be stronger when governance mechanisms focus on the instrumental value of corporate philanthropy. Using a panel sample of group-affiliated firms in Korea from 2011 to 2015, we find that as intragroup sales increase, the level of corporate philanthropy decreases, and such a negative relationship is stronger when outside director representation and foreign investor ownership are high. Our study suggests that internal dependence and corporate governance mechanisms jointly affect the level of corporate philanthropy at firms in a business group. Thus, this study contributes to the literature on corporate philanthropy, business group, and corporate governance.

Keywords: Business group; Corporate governance; Corporate philanthropy; Intragroup transactions (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s10551-018-3913-3

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