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ISSN : 1738-3110

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Vol.15 No.4
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Family Ownership and Firm Value : Perspective to Related-party Transaction and Wealth Transfer

Family Ownership and Firm Value: Perspective to Related-party Transaction and Wealth Transfer

The Journal of Distribution Science(JDS) / The Journal of Distribution Science, (P)1738-3110; (E)2093-7717
2017, v.15 no.4, pp.5-13
https://doi.org/https://doi.org/10.15722/jds.15.4.201704.5
Kim, Dong-Wook (Busan Economic Promotion Agency)
Kim, Byoung-Gon (Changwon National University)
Youn, Myoung-Kil (Eulji University)
Kim, Dong-Wook, Kim, Byoung-Gon, & Youn, Myoung-Kil. (2017). Family Ownership and Firm Value : Perspective to Related-party Transaction and Wealth Transfer. The Journal of Distribution Science(JDS), 15(4), 5-13, https://doi.org/https://doi.org/10.15722/jds.15.4.201704.5
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Abstract

Purpose - This research analyzes the effects of Korean family ownership characteristics on firm value. The positive and negative effects of family ownership on Korean firm value were analyzed. If negative effects are evident, this research explores the factors that cause a decrease in firm value. Research design, data, and methodology - The study examined a total of 5,743 companies listed on the Korea Exchange from the period 2002 to 2012 using a panel data regression analysis. Result - An empirical analysis suggests that Korean family ownership diminishes firm value. Korean family firm value has been reduced when controlling shareholders are participated in management and pursue excessive wages, or make the management entrenchment effects associated with ownership-control disparity. When the controlling shareholders of family firms have increasing control rights over the shareholders' general meeting and the directors' board, the agency costs associated with seeking increasing executive wages or private benefits reduce firm value. Conclusions - This study has significance because it reveals the negative effect of family ownership in Korea on firm value. These negative effects can be the result of agency problems from controlling family shareholders seeking excessive wages or ownership-control disparity.

keywords
Family Ownership, Related-party Transaction, Wealth Transfer, Ownership-Control Disparity, Agency Problem

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The Journal of Distribution Science(JDS)

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