Earticle

초록

영어

This paper examines how investor inertia and limited arbitrage might interact to benefit the controlling families of business groups in a way that is distinct from tunneling or expropriation. Using spin-offs followed by stock-for-stock tender offers by Korean publicly traded firms, we find that outside investors remain passive while family insiders actively tender their shares of the operating subsidiary in exchange for newly issued shares in the holding company. We also find that mispricing relative to those implied in the tender offer exchange ratio is not arbitraged away in 2/3 of our sample transactions, implying a clear violation of law of one price. Such mispricing provides controlling families with a wealth gain of 4 to 5% on average. Our results suggest that insiders may actively exploit behavioral aspects of the stock market to maximize their personal benefits.

목차

Abstract
 1. Introduction
 2. Hypothesis Development
  2.1. Investor Inertia
  2.2 Violation of Law of One Price
 3. Data and Sample
 4. Empirical Results
  4.1. Characteristics of Spin-Offs and Tender Offers
  4.2. Investor Inertia and Changes in Family's Ownership
  4.3. Arbitrage Opportunities During the Subscription Period and Violation of Law of One
  4.4. Wealth Changes for the Controlling Family
 5. Conclusion
 References
 Table
 Figure

키워드

저자

• Woojin Kim [ Seoul National University Business School, Seoul, Korea. ]
• Shu-Feng Wang [ Seoul National University Business School, Seoul, Korea. ]

참고문헌

발행기관

간행물

표지보기 관심저널 등록

• 간행물명

  한국재무학회 학술대회

• 간기

  부정기

• 수록기간

  2006~2024

• 십진분류

  KDC 325 DDC 330