What Makes Group-Affiliated Firms Go Public?

KDI School of Public Policy & Management Paper No. 05-10

KAIST Graduate School of Management Working Paper Series No. 2005-002

40 Pages Posted: 14 Apr 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

Date Written: September 2005

Abstract

The paper attempts to shed light on how group-affiliated firms make their decision on initial public offerings. In particular, we highlight the importance of group-level factors. From our ex ante analysis, using a sample of chaebol affiliated firms in Korea, we find that firms are more likely to go public (i) if a group-controlling shareholder holds high direct share ownership in the company; (ii) if the firm's contribution to group control is low; or (iii) if firms are less likely to benefit from the internal capital market. From our ex post analysis, we find that IPO firms do make heavy capital investments in the IPO year and in the year after.

Keywords: Initial public offering (IPO), group control, internal capital market, business conglomerate, chaebols

JEL Classification: G32, G34

Suggested Citation

Kim, Woochan and Sung, Taeyoon, What Makes Group-Affiliated Firms Go Public? (September 2005). KDI School of Public Policy & Management Paper No. 05-10, KAIST Graduate School of Management Working Paper Series No. 2005-002, Available at SSRN: https://ssrn.com/abstract=691721 or http://dx.doi.org/10.2139/ssrn.691721

Woochan Kim (Contact Author)

Korea University Business School ( email )

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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)

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