The end of rent sharing: corporate governance reforms in South Korea

Ingyu Oh, Soon Suk Yoon and Hyo Jin Kim

Asia Pacific Business Review, 2022, vol. 28, issue 1, 16-37

Abstract: As the imprisonment of Samsung’s heir, JY Lee, clearly indicates, South Korean conglomerate groups (chaebol) face enormous difficulties in protecting their private property via father-son inheritance of the entire group. High party polarization (i.e. intense competition between ideologically divided political parties) within Korean democracy has continuously threatened the chaebols’ private property and family succession system, criticizing the unusually high economic concentration enjoyed by the top ten chaebols. Using the rent sharing view (RSV) of corporate governance, this contribution to the special issue examines key variables in the evolution of Korean corporate governance: the impact of the traditional corporate governance (TCG) and the new holding company system (HCS) on intragroup trading (IGT), non-dividend incomes hoarded by owning families, ownership-control disparity (OCD) and family succession. We find that private property protection through rent sharing continues to overshadow chaebols’ choices about their future corporate governance structure, while the new HCS fails to curb IGT, non-dividend incomes, OCD and family succession.

Date: 2022
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DOI: 10.1080/13602381.2021.1961430

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