- Log In/Sign Up
- P-ISSN2765-6934
- E-ISSN2765-7027
- KCI
ISSN : 2765-6934
Regulatory Disclosure of Large Business Groups in Korea
Abstract
Purpose: This paper examines the theoretical grounds for the disclosure of the Korea Fair Trade Commission. Three central measures of the disclosure are scrutinized: The interconnected status of affiliate companies, the important matters of private affiliates, and the large internal transactions. Contemplating on three measures, respectively, we review the rationale and derive policy implications. Research design, data, and methodology: Collecting the data of violation rates and remedial measures, we analyze the intensity of the disclosure enforcement. These statistics are critically reviewed by the economic literature of mandatory disclosure. Results: Statistics evince that the Korea Fair Trade Commission has enforced the regulatory disclosure quite successfully. Violation rates of the disclosure has declined from the outset. It demonstrates that the Korea Fair Trade Commission has enforced those measures satisfactorily for about a decade. But we cannot ascertain empirically whether the regulatory disclosures are socially and economically beneficial. To evaluate the effect of the regulatory disclosures precisely, we need a further empirical investigation. Conclusions: Despite the lack of policy evaluation, this study suggests complementary measures for current disclosures. First, disclosure of executive compensation in privately held subsidiaries must be introduced. Second, the controlling shareholder/manager should be responsible for information disclosure on foreign subsidiaries.
- keywords
- Regulatory Disclosure, Business Groups, Tunneling
Reference
Bebchuk, L. A., Kraakman, R., & Triantis, G. (2000). Stock pyramids, cross-ownership and dual class equity: The mechanisms and agency costs of separating control from cash-flow rights. In R. K. Morck (Ed.), Concentrated Corporate Ownership(pp.445-460), University of Chicago Press.
Berle, A. A., & Means, G. C. (1932). The modern corporation and private property. New York, Macmillan Publishing Co.
Brusco, S., & Panunzi, F. (2005). Reallocation of corporate resources and managerial incentives in internal capital markets. European Economic Review, 49(3), 659-681.
Coase, R. H. (1937). The nature of the firm. Economica, 4(16), 386-405.
Coase, R. H. (1960). The problem of social cost. Journal of Law and Economics, 3(1), 1-44.
Grossman, S. J. (1981). The informational role of warranties and private disclosure about product quality. Journal of Law and Economics, 24(3), 461-483.
Grossman, S. J., & Hart, O. D. (1980). Disclosure laws and takeover bids. Journal of Finance, 35(2), 323-334.
Gwon, J. H. (2015). A strategic effect of bundling on product distribution. Journal of Distribution Science, 13(10), 15-21.
Gwon, J. H. (2018). Broker-dealer competition in the Korean financial securities markets. International Journal of Industrial Distribution & Business, 9(4): 19-26.
Gwon, J. H., & Moon, B. (2019). Executive compensation in Korea: Evidence from a new mandatory disclosure. Journal of Asian Finance, Economics and Business, 6(3), 91-101.
Hart, O. D. (2009). Regulation and Sarbanes-Oxley. Journal of Accounting Research, 47(2), 437-445.
Horack, H. (1918). Insolvency and specific performance. Harvard Law Review, 31(5), 702-720.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and wwnership structure. Journal of Financial Economics, 3(4), 305-360.
Johnson, S., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (2000). Tunneling. American Economic Review, 90(2), 22-27.
La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (1999). Corporate Ownership Around the World. Journal of Finance, 54(2), 471-517.
Leuz, C., & Wysocki, P. D. (2016). The economics of disclosure and financial reporting regulation: Evidence and suggestions for future research. Journal of Accounting Research, 54(2), 525-622.
Milgrom, P. (1981). Good news and bad news:Representation theorems and applications. Bell Journal of Economics, 12(2), 380-391.
Shavell, S. (1986). The judgment proof problem. International Review of Law and Economics, 6, 45-58.
- Downloaded
- Viewed
- 0KCI Citations
- 0WOS Citations