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Business group heterogeneity and firm outcomes: Evidence from Korean chaebols

Romain Ducret () and Dusan Isakov
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Romain Ducret: Faculty of Economics and Social Sciences, Postal: Boulevard de Pérolles 90, 1700 Fribourg, http://www.unifr.ch/ses/

No 531, FSES Working Papers from Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland

Abstract: This paper examines the impact of business group affiliation on the performance and corporate policies of Korean listed firms over the period 2007-2019. This study proposes a novel approach allowing the observation of heterogeneity in the affiliation effects. Overall, we conclude that business group characteristics are reflected in firm outcomes. We find that investors perceive group membership positively as they pay a premium to hold affiliated firms. The premium is related to profitability and size of business groups, consistent with resourcebased theories. The analysis also identifies significant group specific effects on firm policies. These findings suggest that several business groups follow group-level strategies and apply homogeneous financial and investment policies to all their affiliates.

Keywords: Business groups; performance; financing policies; investment; Korea (search for similar items in EconPapers)
JEL-codes: G30 G32 G35 L22 (search for similar items in EconPapers)
Pages: 39
Date: 2023-04-07
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-ind, nep-inv and nep-sbm
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