Abstract

http://ssrn.com/abstract=760064
 
 

Footnotes (362)



 


 



A Forensic Study of Daewoo's Corporate Governance: Does Responsibility Solely Lie With the Chaebol and Korea?


Joongi Kim


Yonsei Law School - College of Law


Northwestern Journal of International Law and Business, Vol. 28, No. 3

Abstract:     
In 1999, the Daewoo Group, one of the largest conglomerates in the world, collapsed, committing a staggering $15.3 billion in accounting fraud in the process. Daewoo's problems, however, did not remain a case isolated to a Korean chaebol. Daewoo's demise foreshadowed the corporate scandals that recently ravaged confidence in financial markets around the world. Leading financial institutions, investment banks, securities analysts, accounting firms, and credit agencies failed to monitor and detect Daewoo's problems. Despite warnings from the Daewoo case, policy discussion focusing on the importance of reputational intermediaries and gatekeepers in particular has only recently emerged. This forensic study analyzes the history of Daewoo, one of Korea's major chaebols, focusing on these vast corporate governance failures. It surveys Daewoo's internal corporate governance, particularly its controlling shareholder, boards of directors, officers, employees, and auditors. Furthermore, the external corporate governance landscape and the failure of key stakeholders, reputational intermediaries, gatekeepers, and public institutions are explored. By analyzing a conglomerate from a leading emerging market, this study also contributes to the comparative corporate governance literature regarding the potential for convergence, and the importance of formal law and enforcement. It describes how Korean companies have converged toward a more shareholder-oriented and stakeholder-oriented corporate governance model from a state-oriented model. It explains the ineffective corporate governance system in place at the time of Asian financial crisis and the background behind the legal reforms that followed. Finally, this study highlights the emergence of functional substitutes to formal corporate law that have been critical to legal enforcement and creating corporate governance discipline.

Number of Pages in PDF File: 96

Keywords: Corporate Governance Chaebol Korea Daewoo

JEL Classification: G30, G34, K14, K22, K33, L52, M10, M14, M40

Accepted Paper Series





Download This Paper

Date posted: July 28, 2005  

Suggested Citation

Kim, Joongi, A Forensic Study of Daewoo's Corporate Governance: Does Responsibility Solely Lie With the Chaebol and Korea?. Northwestern Journal of International Law and Business, Vol. 28, No. 3. Available at SSRN: http://ssrn.com/abstract=760064

Contact Information

Joongi Kim (Contact Author)
Yonsei Law School - College of Law ( email )
50 Yonseiro
Seodaemungu
Seoul, 120-749
Korea
82-2-2123-4181 (Phone)
HOME PAGE: http://lawschool.yonsei.ac.kr
Feedback to SSRN


Paper statistics
Abstract Views: 4,281
Downloads: 819
Download Rank: 15,471
Footnotes:  362

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo1 in 0.719 seconds