Group Control Motive as a Determinant of Ownership Structure in Business Conglomerates

49 Pages Posted: 22 Feb 2005

See all articles by Woochan Kim

Woochan Kim

Korea University Business School; European Corporate Governance Institute (ECGI); Asian Institute of Corporate Governance (AICG)

Taeyoon Sung

Yonsei University, School of Economics

Youngjae Lim

Korea Development Institute (KDI)

Date Written: January 2005

Abstract

In this paper, we attempt to make two major contributions to the literature that studies the determinants of controlling-minority ownership structure (determinants-of-disparity studies). First, we introduce the concept of group control motive and empirically show that this motive greatly shapes the controlling-minority ownership structure. Specifically, we show that controlling families increase their direct shareholdings in firms that are more effective in bringing in additional cash flow rights or control over voting rights. Second, we find that the level of disparity between voting and cash flow rights is significantly higher than the levels previously reported in the literature on Korean firms when we include non-public firms and adopt a control concept that is more flexible and closer to reality.

Keywords: ownership structure, business conglomerate, chaebol, voting rights, cash flow rights, disparity

JEL Classification: G32, G34

Suggested Citation

Kim, Woochan and Sung, Taeyoon and Lim, Youngjae, Group Control Motive as a Determinant of Ownership Structure in Business Conglomerates (January 2005). Available at SSRN: https://ssrn.com/abstract=669321 or http://dx.doi.org/10.2139/ssrn.669321

Woochan Kim (Contact Author)

Korea University Business School ( email )

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Seoul, Seoul 136701
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European Corporate Governance Institute (ECGI) ( email )

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Belgium

Asian Institute of Corporate Governance (AICG) ( email )

1, 5-ga, Anam-dong
Sungbuk-gu
Seoul, 136-701
Korea, Republic of (South Korea)

Taeyoon Sung

Yonsei University, School of Economics ( email )

50 Yonsei-Ro
Seoul, 120-749
Korea, Republic of (South Korea)
+82-2-2123-5494 (Phone)

Youngjae Lim

Korea Development Institute (KDI) ( email )

263 Namsejong-ro
Sejong-si 30149
Korea, Republic of (South Korea)

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