Earticle

초록

영어

This paper examines how malicious corporate raiders operating under poor investor protection environment may actually raid target firms’ resources through takeovers. Our perspective is distinct from both (1) conventional free cash flow theory where the central conflict of interests lies between bidder’s shareholders and managers, and (2) intra-business group tunneling where resources are transferred among existing member firms through non-arm’s length transactions. Using a large sample of publicly traded firms in Korea, we find that the probability of explicit looting through embezzlement or breach of fiduciary duty conditional on a recent change in control amounts up to 12%, almost 10 times as large as the corresponding probability when control remains intact. This finding is robust to controlling for the factors that induced the control change in the first stage. Such misbehaviors are more likely in targets with more liquid assets or multiple control changes. Market reactions to changes in control are initially positive but revert back within 6 months, mostly due to the persistent negative returns for those that later become subject to embezzlement or breach of duty. These findings suggest that market for corporate control may aggravate agency problems when investor protection is insufficient.

목차

Abstract
 1. Introduction
 2. Related Literature
 3. Data and Sample
 4. Which target characteristics attract potential raiders?
 5. Corporate Misbehaviors subsequent to Changes in Control
 6. Announcement Returns around Changes in Control
 7. Conclusion
 References
 Table
 Figure

키워드

저자

• Hee Sub Byun [ Korea University Business School, Seoul, Korea. ]
• Woojin Kim [ Seoul National University Business School, Seoul, Korea. ]
• Eun Jung Lee [ Hanyang University, Ansan, Korea. ]
• Kyung Suh Park [ Korea University Business School, Seoul, Korea. ]

참고문헌

발행기관

간행물

표지보기 관심저널 등록

• 간행물명

  한국재무학회 학술대회

• 간기

  부정기

• 수록기간

  2006~2024

• 십진분류

  KDC 325 DDC 330