Earticle

We examine how agency conflict distorts the resource allocation in a business group with special attention to the incentives of the controlling shareholder. Specifically, we analyze whether the controlling shareholder’s wealth in each affiliate systematically affects the amount of corporate giving in that affiliate. We find that the affiliate in which a controlling shareholder has more (less) her own equity stake makes less (more) corporate giving. This result indicates that a controlling shareholder, pursing her own interest, intends to raise her reputation through corporate philanthropy with bearing less cost to her. This interpretation is also supported by other results including the relation between corporate giving and firm’s financial performance, effect of corporate governance on this relation, and result with the sub-sample of firms with family CEO’s. Generally, our findings are consistent with the exploitation hypothesis of corporate giving.

선진국의 자본시장과 비교해 중국 자본시장의 주요한 문제점으로 주가급락 사태를 꼽을 수 있다. 따라서 주가급 락 위험을 줄일 수 있는 요인에 관한 연구는 상당히 중요한 의미가 있다. 본 연구는 최대주주의 보유주식 비율에 초점을 두고, 지분율이 증가함에 따라 기업의 경영자를 감독할 유인이 더 높아지는 지와 이를 통해 경영자의 기회주의적 행동이 감소 되는지 검토해보고자 한다. 이를 위해 2009년부터 2019년까지의 중국 상장기업 자료를 수집하고, 실증분석을 통 해 최대주주 지분율과 상장기업의 주가급락 위험 간의 관계를 분석하였다. 연구결과에 따르면 국유기업의 최대주주 지 분율이 높을수록 기업의 주가급락 위험이 유의하게 낮아진 것으로 나타났다. 이는 국유기업의 최대주주는 정부 기관으 로서 경영자에 대한 정부의 감독이 비국유기업의 최대주주보다 더 엄격하기 때문으로 보인다. 본 연구는 최대주주의 지분율이 높을수록 경영자의 기회주의 행위가 감소하며, 기업과 주주 간의 정보비대칭이 완화될 수 있음을 시사한다.

Chinese stock market often rises and falls sharply. The impact of the stock price crash risk has become a hot research field to maintain financial stability. This study starts from the perspective of the proportion of largest shareholders holding shares, and studies whether largest shareholders have more incentive to supervise management and reduce self-interest behavior of management. We use the data of Chinese listed companies from 2009 to 2019 as a sample, and study the relationship between largest shareholders and share price crash risk. Empirical research shows that the higher the proportion of largest shareholders of state-owned enterprise, the company's stock price crash risk can be significantly reduced. This study suggests that the higher the share of the largest shareholder, the lower the opportunistic behavior of managers and that information asymmetry between the company and the shareholders can be alleviated.

본 논문은 외부위탁운용관리(OCIO; outsourced chief investment officer)와 관련된 계약 기간과 기금의 전문성을 중심으로 OCIO의 대리인 문제를 분석한다. 국내 OCIO의 경우, 대리인 문제로 인하여 해외 OCIO와 비교하여 낮은 성과를 보이는 것으로 지적된다. 본 논문은 OCIO의 기금운용과정에서 나타나는 대리인 문제를 분석하는 모형을 제시하며, OCIO의 계약 기간에 따라 수익성이 증가하고, 기금의 전문성과 OCIO의 위험관리 수준에 따라 재계약 가능성이 변화하는 것을 고려한다. 본 논문의 분석결과, OCIO는 계약 기간이 길수록, 기금의 전문성이 낮을수록 대리인 문제를 일으킬 가능성이 커진다. 이는 기존 연구의 제안처럼 단순히 계약 기간을 늘려 OCIO의 수익성을 개선하려 하면, OCIO가 기금위험관리에 소홀해지는 대리인 문제가 발생할 수 있음을 시사한다. 따라서 OCIO의 대리인 문제를 감시하기 위해 기금의 투자 전문성을 일정 수준 이상으로 확보한 후, 이에 맞게 계약 기간을 늘려 수익성을 개선해야 한다. 이는 기금과 OCIO 사이의 장기적인 협력관계를 구축하여, 기금과 OCIO 간 계약과 업무의 효율성도 개선될 것으로 기대된다.

With the increasing demand and supply for outsourced chief investment officers (OCIOs) in Korea, they are frequently discussed in the literature. Unlike OCIOs in other countries, those in Korea lack institutional efficiency; hence, some problems are being pointed out, such as the provision of low returns by them. Previous discussions define these as an agency problem related to OCIOs. They suggest that the fee system and short contract period cause these low returns and argue that a performance fee should be paid, or contract terms should be extended. However, they overlook OCIOs’ risk management. Even if an OCIO improves revenue, agency problems may arise if risk is not managed adequately. Accordingly, unlike previous research, this study investigates the issue of OCIOs’ risk management performance. This study provides proof for the argument that improving funds’ expertise is essential. With increased instability and complexity in the financial market, funds are very likely to have limited access to information. Thus, funds use OCIOs’ services because of the high cost of collecting information and evaluate the performance of the portfolio created by the OCIO according to their own expertise. In these circumstances, we review the impact of the fund's expertise on the agency problem related to OCIOs. We also consider whether extending the contract period to improve an OCIO's poor returns could cause agency problems related to OCIOs’ risk management. In this study, we construct a model for analyzing the agency problem related to OCIOs, focusing on the contract period and the fund’s expertise. As the contract period increases and the fund loses its expertise, the OCIO does not manage risk faithfully. However, it is necessary to extend the contract term to improve profitability. Thus, to prevent agency problems from occurring in the process of improving an OCIO’s returns, the contract period should be economics, solutions to agency problems are classified as either proper incentive design or the direct monitoring of agents. We argue that the agency problem related to low returns in the OCIO structure can be solved through incentive design, whereas the problem related to risk management can be solved through monitoring. Increasing the contract term serves as an incentive for OCIOs to improve their returns, and evaluating funds based on an OCIO's risk management performance induces the OCIO to manage risk. Thus, forging long-term partnerships between OCIOs and funds is essential for resolving agency issues.

본 연구는 2002년부터 2016년까지 한국증권거래소에 상장되어 있는 12월 결산법인(금융 업 제외)을 대상으로 집중투표제가 경영진의 조세회피 활동에 미치는 영향을 분석하였다. 분석결과, 집중투표제를 도입한 기업일수록 조세회피 수준이 감소하는 것으로 나타나, 집중투표제를 도입한 기업의 소수주주들은 자신들을 대변할 이사 선임을 통해 경영진 견제 활동을 하고 있음을 알 수 있었다. 법적 강제력이 마련되지 못한 상황에서 기업의 반대로 환영받지 못하고 있는 집중투표제가 제도의 도입 취지와 목적을 달성하기 위해서 는 정부와 기업의 노력도 중요하겠지만, 본 연구와 같은 제도의 중요성과 필요성을 부각시 키는 관련 연구들이 활발히 진행되어 이론적 근거가 마련되고, 사회적 관심을 유발시키는 것이 무엇보다 중요한 선행 과제일 것이다. 본 연구는 집중투표제가 회계투명성 향상과 기업가치에 기여한다는 기존 연구들에 실증적 증거를 더함으로써 집중투표제의 필요성과 중요성을 부각시키고, 제도 도입의 법제화를 위한 이론적 근거를 마련하는데 기여할 수 있을 것으로 사료된다.

A companies limited by shares—a common modern corporate form—have the advantages of limited liability and free transfer of shares; however, they suffer from the structural agency problem. Governance is necessary to prevent managers from engaging in private profit-seeking activities. South Korea established the cumulative voting (CV) system to enhance minority shareholders' rights and control management impropriety. However, CV is a burden to businesses, and most avoid it by excluding it from the articles of association because it has no legal force. This study highlights the necessity of the CV system, demonstrating that its adoption reduces tax avoidance by allowing minority shareholders to monitor management.

본 연구는 주주행동주의를 바탕으로 한 소액주주의 행동이 기업경영에의 견제 및 감시 역할을 효율적으로 수행하고 있는지의 여부를 기업의 재무적 성과의 변화로 판단할 수 있을 것으로 간주하고 이에 대해 실증적으로 분석하였다. 실증분석결과 소액주주의 지분율이 높아질수록 기업의 이익지속성은 오히려 낮아지는 것으로 나타났으며, 이는 특정 연도의 영향을 배제하기 위한 year cluster 회귀분석을 사용한 경우에도 여전히 강건한 것으로 나타났다. 또한 소액주주의 증가로 인한 영향력 행사가능성의 증가가 실질적으로 기업의 이익지속성에 절대적으로 미치는 영향은 감소하는 것으로 나타났으며 이 또한 year cluster 회귀분석을 사용해도 강건한 것으로 나타났다. 이는 일반 목적의 투자자로서 소액주주들이 기업의 주인으로서 장기적 관점의 영업활동을 지지하기 보다는 단기 이익획득목적의 행동을 하며, 소액주주의 지분율이 높아질수록 개별 주주들의 무임승차 유인으로 인해 그 영향력의 크기는 오히려 감소할 가능성이 있다는 것을 의미하는 결과이다. 본 연구의 결과 지금까지 부각되어온 사회운동으로서 주주행동주의를 기반으로 한 소액주주의 영향력이 실제로는 사회전체적인 이익만을 고려하는 것이 아니라, 자신의 이익을 위해서 행사될 가능성이 있다는 것을 실증적으로 밝혔다는 데 의의가 있다. 따라서 본 연구는 지금까지 자본시장에 대해 실증적으로 분석되지 않고 단지 이론적으로만 존재해온 논의에 대해 실증적인 증거를 제시했다는 측면에서 공헌점이 있다고 여겨진다. 또한, 본 연구는 ‘사회적 존재로서의’주주로서 이들의 행동주의가 자본시장에서 어떠한 역할을 하는지에 대한 사회학적 연구를 이론적 바탕으로 하여 재무데이터를 사용하여 실증 분석하고자 한다는 점에서 기존 연구들과 차별성을 갖는다.

This study empirically examined whether the behavior of minority shareholders can be judged as a change in the financial performance of the company as to whether they are effectively performing the role of supervising the firm based on shareholder activism. Empirical results show that as the stake of the minority shareholder increases, the earning persistence of the firm is lowered, which is still robust even when using the year cluster regression analysis to exclude the influence of the specific year. In addition, the influence of the increase in the probability of influence due to the increase of the minority shareholder is practically reduced to the absolute earnings persistence of the firm, which is also robust using the year cluster regression analysis. This is because, as general-purpose investors, minority shareholders act as the owners of the corporation for the purpose of obtaining short-term profits rather than support long-term business activities. As the share of minority shareholders increases, the shareholders' Which means that there is a possibility of decrease. As a result of this study, I have demonstrated that the influence of minority shareholders based on shareholder activism as a social movement that has been highlighted until now is not only to consider the whole society's interests but to be exercised for their own benefit It is meaningful. Therefore, this study suggests that there is a contribution in terms of presenting empirical evidence on the debate that has existed only theoretically but not empirically on capital markets. In addition, this study seeks to empirically analyze the sociological research on the role of activism in capital markets as a 'social entity' shareholder, using financial data as the theoretical basis, Respectively.

본 연구는 금융환경변화 속에서 어려움을 겪고 있는 제2 금융기관의 경쟁력 향상 등을 위해 제2금융권으로의 상조서비스 도입 및 활성화 방안을 마련해 보고자 하였다. 이에 본 연구에서는 2차에 걸친 설문조사를 실시하였다. 먼저 1차는 상조기업의 상조서비스를 가입하고 서비스 이용 경험이 있는 고객 중 제2금융기관 거래 경험이 있는 고객을 대상으로 설문조사를 실시하여 제2금융권에서의 상조시장 진출에 대한 타당성을 확인하고자 하였다. 그리고 2차는 실제 2금융권에 종사하는 종사자를 대상으로 향후 상조사업에 진출했을 때 해결해야할 문제점과 개선점을 확인하고 현재수준에서의 강점과 요구되어지는 강점의 수준을 살펴본 결과는 다음과 같다. 먼저 1차 조사의 결과에서는 전체적으로 상조회사에 대한 인식에 비해 제2금융권의 인식이 긍정적이었고, 실제 상조서비스를 실시하게 된다면 현재 상조기업이 제공하는 서비스보다 높은 수준을 제공해 줄 것이라고 생각하는 것을 확인할 수 있었다. 그리고 2차 조사 결과에서는 2금융권이 가진 내부적인 문제해결과 역량 강화가 필요하며 현재 수준의 역량으로도 상조시장에 진출하는데 문제가 없다고 생각하는 것을 확인할 수 있었다. 이러한 연구 결과를 바탕으로 본 연구에서는 SWOT 관점에서 활성화 방안을 제시하였으며 이를 위한 현실적인 노력을 제시하였다. 본 연구는 기존의 상조 관련 연구나 제2금융권의 사업 활성화를 위한 연구에서 다루지 않은 종합적인 비교와 현실적인 방안을 제시했다는 점에서 연구의 차별성과 의의를 갖는다고 할 것이다.

This study empirically examined whether the behavior of minority shareholders can be judged as a change in the financial performance of the company as to whether they are effectively performing the role of supervising the firm based on shareholder activism. Empirical results show that as the stake of the minority shareholder increases, the earning persistence of the firm is lowered, which is still robust even when using the year cluster regression analysis to exclude the influence of the specific year. In addition, the influence of the increase in the probability of influence due to the increase of the minority shareholder is practically reduced to the absolute earnings persistence of the firm, which is also robust using the year cluster regression analysis. This is because, as general-purpose investors, minority shareholders act as the owners of the corporation for the purpose of obtaining short-term profits rather than support long-term business activities. As the share of minority shareholders increases, the shareholders' Which means that there is a possibility of decrease. As a result of this study, I have demonstrated that the influence of minority shareholders based on shareholder activism as a social movement that has been highlighted until now is not only to consider the whole society's interests but to be exercised for their own benefit It is meaningful. Therefore, this study suggests that there is a contribution in terms of presenting empirical evidence on the debate that has existed only theoretically but not empirically on capital markets. In addition, this study seeks to empirically analyze the sociological research on the role of activism in capital markets as a 'social entity' shareholder, using financial data as the theoretical basis, Respectively.

본 연구는 상장기업의 신용평정(Credit Rating)이 주식시장과 기업가치에 미치는 영향에 관한 연구이다. 기업이 자본시장에서 공개적으로 자금조달을 할 수 있다는 것은 기업의 성장과정에 있어서 대단히 중요한 분기점이 되는 사건이다. 하지만 상장(IPO)에 비해 신규상장기업의 신용평정에 대한 실증연구 사례는 매우 적은 상황이다. 특히 최근 기술상장 특례제도의 도입과 코넥스 시장의 도입 등에 의하여 상장의 문턱은 매우 낮아졌으나, 반면 상장기업이라는 사실이 이전과는 달리 계속기업으로서의 지속가능성과 재무적 건전성을 더 이상 충분히 입증하지 못할 수 있다는 점에서는 부작용이 염려되는 상황이다. 본 연구는 아직 그 효과가 명확히 밝혀지지 않은 상장기업의 채권발행과 신용평정에 대한 실증분석을 통하여 신용등급이 기업가치에 미치는 영향을 구체화하고자 하였다. 또한 본 연구는 2002년 이후 상장제도의 개편과정에서 나타난 한계점들을 해소하는데 있어 신용등급평정이 기여할 수 있는 점을 실증하였다는 점에서 중요한 시사점이 있다.

This paper studies on the influence of initial credit rating of listed firms on the stock market and firm value. The fact that a firm become able to finance from the public capital market is a critical bifurcation of a firm’s growth process. However, empirical studies on initial credit ratings are rare compared to those on initial public offerings. In particular, the threshold of listing has been lowered due to the special technology listing system and opened the Korea New Exchange (KONEX) market. However, current circumstances imply limitations since the fact that a firm is listed no longer fully demonstrate sustainability and financial soundness of a firm as a going concern. This paper verifies the effect of initial credit rating on corporate value through empirical analysis of initial credit rating cases of listed companies, which has been unclear up to now. In addition, this paper has meaningful implications in that it demonstrates the contribution of the credit rating in solving the limitations that occurred after the revision of the listing system in 2002.

본 연구는 중국 상장기업에서 외국인 투자자가 연구개발투자에 미치는 영향을 규명하기 위해 2009년부터 2014년까지 중국 증권거래소(상해 또는 심천)에 상장되어 있는 371개 기업의 5년간 패널자료를 이용하여 GMM 추정 방식의 동적 패널분석을 실시하였다. 실증분석의 주요 결과는 다음과 같다. 첫째, 중국 국내 상장 외국인 지분율은 연구개발투자(연구개발투자/매출액, 연구개발투자/종업원 수)에 정(+)의 유의미한 영향을 미치는 것으로 나타났다. 그러나 외국인 지분율과 기업의 성장잠재력의 교차 분석에서는 추가적으로 유의적인 관계는 존재하지 않았다. 본 결과는 중국 국내 상장 외국인 투자자는 지분 보유 기업을 대상으로 적극적인 감시 활동을 전개하여 연구개발투자를 촉진하도록 영향을 미치고 있음을 시사하고 있다. 둘째, 해외 상장 외국인 지분율은 연구개발투자에 직접적인 영향을 미치지 않는 것으로 나타났다. 그러나 해외 상장 외국인 지분율과 기업의 성장잠재력 간의 교차 분석에서는 양자 간에 정(+)의 유의적인 관계가 확인되었다. 본 결과는 해외 상장 외국인 투자자는 성장잠재력이 높은 기업을 대상으로 적극적인 감시 활동을 전개하여 연구개발투자를 촉진하도록 영향을 미치고 있음을 시사하고 있다. 전체적으로 본 실증 결과는 외국인 투자자의 유형과 연구개발투 자의 측정 방법에 따라 실증결과가 일부 상이하지만 중국 상장기업에서 외국인 투자자는 지분 투자 기업을 대상으로 경영 감시 활동을 전개하여 연구개발투자를 촉진하도록 직, 간접적인 영향을 미치고 있음을 지지하고 있다.

The paper aims to explore the relationship between foreign ownership and firms' R&D investment in Chinese listed firms. Using five-year longitudinal data of 371 firms during the period of 2009-2013, this study finds that when foreign ownership in domestic listed stocks of firms have positive effects on firms' R&D investment in terms of R&D expenditure over firms sales as well as R&D expenditure per employee, suggesting that foreign shareholders exercise active monitoring roles in targed firms, by exerting pressure on them to increase the amount of risky investment. On the other hand foreign ownership do not have moderating effects on firms' R&D investment with respect to their growth potential. The study also finds that foreign ownership in oversea listed stocks of firms do not have significant effects on firms' R&D investment. On the other hand foreign ownership have positive moderating effects on R&D investment of firms which have high growth potential, suggesting that foreign shareholders exert active monitoring roles in targed firms, demanding them, which are in high need of investment in risky projects due to their high growth potential, to increase the amount of risky investment to capture them. Though the relations between foreign ownership and firms' R&D investment is slightly different according to its measurements, the results, in general, support that foreign shareholders exercise active monitoring roles in Chinese listed firms, demanding them to increase the amount of R&D investment directly or indirectly, which contribute to the mitigation of agency problem between managers and shareholders on the decision of risky projects in Chinese listed firms.

한국의 인수합병시장은 실질적으로 외환위기 이후에 형성되었다. 개발경제시기 인수합병은 정부주도하에 이루어지는 타율적･구매자 우위 성격을 가졌다. 외환위기로 발생한 부실기업정리의 한 방편으로 도입된 인수합병 활성화정책으로 한국의 인수합병시장은 양적･질적으로 발전하였다. 본 연구는 2010~2013년을 대상으로 금감원이 제공하는 공시자료를 바탕으로 하고 각종 신문기사를 참조하여 구축한 자료를 이용하여 한국 인수합병시장의 효율성에 대한 실증분석을 시도하였다. 특히 인수합병시장의 효율성 분석을 위해 산업수준 및 기업수준에서 Tobin’s q를 분석의 중심에 두었다. 분석결과, 산업수준의 분석에서는 대체적으로 q가 높을수록 인수합병 가능성이 증가하는 결과를 보였으며 이는 대체로 성장가능성이 높은 산업에서 인수합병이 더 활발히 일어나는 것으로 해석될 수 있다. 또한 한국의 인수합병은 산업수준의 구조변화 등 소위 산업충격에 영향을 받았음을 볼 수 있었다. 기업수준의 분석에서는 전체적으로 q가 높을수록 인수합병 가능성이 증가한 가운데 재벌에 속한 기업이면 인수합병의 가능성이 증가하였으며 대리인 문제가 심각하다는 증거를 발견하지 못하였다.

This research aims to analyze the efficiency of mergers and acquisitions(M&A) in Korea empirically. Especially, using the newly collected data including newspaper and disclosure of the Financial Supervisory Service, it investigates M&A in Korea at the industry and firm level. Our results suggest that at the industry level, the higher tobin’ Q of the firm increase the possibility of M&A and industry shock plays important role in M&A in Korea. Also, at the firm level, there is no concrete evidence of serious agency problem in this M&A market and it is crucial for the market whether the firm is a subsidiary of the Korean conglomerate(chebol) as well as it has higher Tobin’s Q

본 연구는 기업이 대리인 비용을 줄이기 위한 감시장치인 고품질의 감사제도를 구축했을 때 원가의 하방경직성이 완화되는지를 검증하고자 하였다. 대부분의 선행연구들은 감사품질의 대용치로 감사인 규모 또는 산업전문감사인 여부를 사용하고 있는데, 이는 산업전문감사인이 해당 전문산업에 속한 기업을 감사할 때 전문적인 지식과 경험에 의하여 더 높은 품질의 감사업무를 수행할 수 있으리라는 논리에 근거한다. 따라서 본 연구는 대표적인 감사품질의 대용치인 감사인의 산업전문성에 따라 원가의 하방경직성이 완화되는지를 실증분석하였다. 분석을 위해 2007년부터 2013년까지의 2,101개 금융업을 제외한 증권거래소에 상장된 기업을 표본으로 사용하였으며, 실증을 위해서 원가의 하방경직성을 측정한 Anderson et al.(2003)의 다중회귀모형을 사용하였다. 실증분석 결과, 원가의 하방경직성은 분석에 사용된 거의 모든 원가항목에서 관찰되었다. 또한 산업전문감사인에 의해 감사를 받는 피감사기업이 비산업전문감사인에 의해 감사를 받는 피감사기업과 비교하여 원가의 하방경직성(또는 탄력성)이 작을(클) 것이라는 본 연구의 가설에 대한 분석 결과는 감사인의 산업전문성 조건 ③에서 지지되는 결과를 나타냈다. 본 연구는 선행연구에서 제시하는 원가의 하방경직성의 주요원인인 대리인 문제에 대해서, 이를 억제할 수 있는 감사제도를 통해 실증적으로 규명하고자 하였다는데 의의가 있다.

This study tests whether the Auditor Industry Specialization has an effect on Asymmetric Cost Behavior. Anderson et al. (2003) explained that key motive of management’s decisions inducing cost stickiness is to pursue its private interest for the purpose of maximizing its own utility. In other words, sticky costs are related to agency problem. Although many studies have widely accepted the possible logic that sticky costs stem from agency problem, few have empirically examined the association between asymmetric cost behavior and agency problem. This study aims to investigate directly whether agent-inspecting system outside a firm such as audit industry specialization lessens cost stickiness caused by agency problem. Samples are listed firm-year observations of 2,101 from the year of 2007 to 2013, and multiple regression model derived by Anderson et al. (2003) is applied. Empirical results show that costs are less stickier in case of firms with industry specialist auditors than in those without industry specialist auditors. The results indicate that asymmetric cost behavior is related to agency problem.

본 연구는 한국 자본시장을 대상으로 자본투자(capital investment)와 주식수익률 간의 관계를실증적으로 다루었다. 실증분석을 위하여 1999년～2013년 동안 한국거래소 유가증권(KOSPI)시장에 상장된제조업 소속 기업들 중 일정요건을 충족하는 기업의 주가 및 재무제표 자료를 사용하였다. 분석방법은 자본투자, 잉여현금흐름(free cash flow), 부채비율(leverage ratio) 등의 세 가지 변수를 기준으로 구성한 포트폴리오 및 투자전략의 성과분석, Fama-French(FF) 3요인 모형을 이용한 성과분석, 그리고 기업-연도별 자료의특성을 반영한 패널자료분석(panel data analysis) 등이다. 주요 연구결과는 다음과 같다. 첫째, 자본투자(CI)포트폴리오를 이용한 분석결과, 자본투자와 주식수익률 간에 유의한 관계는 존재하지 않는 것으로 나타났다. 둘째, 대리인 문제와 관련된 변수로서 잉여현금흐름 및 부채비율을 추가적으로 고려한 포트폴리오 분석결과,현금흐름이 많거나 부채비율이 낮은 기업집단에서도 자본투자와 주식수익률 간에 유의적인 관계는 발견되지않았다. 이는 대리인 문제와 관련된 변수가 자본투자와 주식수익률의 관계에 별다른 영향을 미치지 못함을의미한다. 셋째, FF 3요인 모형을 이용한 분석결과, 포트폴리오 및 투자전략의 성과는 FF 3요인에 의해대체로 설명 가능하였다. 넷째, 개별기업을 대상으로 실시한 패널자료분석의 결과, 포트폴리오 접근법에서와같이 자본투자와 주식수익률 간에 유의적인 관계가 존재하지 않는 것으로 나타났다. 본 연구의 결과는 한국자본시장에서 자본투자가 주식수익률의 향방을 파악하는 데 유용한 정보가 될 수 없음을 시사한다. 본 연구는,저자들이 아는 한, 한국 자본시장을 대상으로 자본투자와 주식수익률의 관계를 다룬 최초의 시도일 수 있다는점에서 의의를 지닌다

This paper examines the relationship between capital investments and stock returns in Korea. The prior literatures suggest a number of potential explanations on weather or not capital investmentsare significantly correlated with subsequent stock returns. McConnell and Muscarella(1985) hypothesize that unexpected changes in capital spending conveyto the market unexpected changes in the value of the firm’s investment opportunities under assumptionthat managers act in shareholders’ best interests. They find that increases (decreases) in plannedcapital expenditures are related with significant positive (negative) excess stock returns for industrialfirms. They interpret the evidence as being consistent with the hypothesis that managers seek tomaximize the market value of the firm in making their corporate capital expenditure decisions. Jensen and Meckling(1976) present the effect of agency costs on a firm's shareholders. Theiranalysis suggests that the agency costs related with the capital investments increase as the size ofthe firm increases. The increase in agency costs occurs because of the outsiders’ incapability tomonitor managers' actions. Jensen (1986) asserts that even if projects have negative NPV the incentiveto overinvest in the projects is intensified when the firm produces cash flow in excess of that neededto fund projects which create value. His argument is based on the hypothesis that other things equal,managers of firms that produce high levels of cash flow are more likely to have the opportunityto overinvest and are more likely to do so than are firms with low levels of cash flow. Thus, itcan be expect the agency costs are linked with capital investments to be increasing in free cashflows. Easterbrook(1984) indicates that capital markets provide a role in the monitoring of managers. Jensen(1986) suggests that high financial leverage of itself imposes discipline on management. Highfinancial leverage bonds managers to use free cash flow, that otherwise could be wasted on empirebuilding activities, to meet financial obligation. Therefore, the agency costs linked with capitalinvestments to be reduced by the high debt ratios. Our sample includes manufacturing firms listed on KOSPI of KRX(Korea Exchange) from 1999to 2012. Our sample excludes firms with a negative book value and firms that have other monthsdifferent from December as the last month of fiscal year and change the settlement month. Datafor the stock and financial variables are obtained form KIS-value database. For an empirical research,portfolio approach, Fama and French(FF) 3-factor model, panel regression model are employed. Weidentify high capital investment stocks and low capital investment stocks according to the amountof capital investments and then classify them into various portfolios by using free cash flow andleverage ratio respectively. And then we evaluate the average monthly returns of portfolios andinvestment strategies. We also apply the FF 3-factor model to analyze the performances portfoliosand investment strategies. We use panel data analysis to examine the relation between capitalinvestments and stock returns in individual firms. We find that (i) there is no significant relation between capital investments and stock returnsin Korea, (ii) there is no significant capital investment-stock return relation even if in the analysisdone with considering two variables free cash flow and leverage ratio which are related to agencyproblems, (iii) performances of all of the portfolios and investment strategies are explained by threefactors of FF 3-factor model, (iv) there is no significant relation between capital investments andstock returns in the panel data analysis using individual stocks. The results of this study are differentfrom those of prior studies which examine the relationship between capital investments andsubsequent stock returns in international markets. To our knowledge, this is among the first to examinethe relationship in Korea.

본 연구는 대주주, 증권사 및 투자자간 정보 보유 정도가 각각 상이한 유상증자라는 경제적 사건을 중심으로 발행사 대주주의 보유지분율에 따른 경제적 유인이 유상증자의 방식 및 증권사와의 주간사 계약에 어떠한 영향을 미치며, 궁극적으로는 이들이 발행 가격 결정에 어떠한 영향을 미치는지 분석한다. 실증분석 결과 첫째, 대주주 지분율이 높을수록 발행사는 주주우선배정 방식보다는 주주배정 방식을 선호하고, 반대의 경우 주주우선배정 방식보다는 일반공모 방식을 선호하였다. 이는 대주주가 발행사에 대한 우월한 정보 보유를 바탕으로 발행사에 대한 관여를 통하여 이윤을 추구하며, 일반 투자자로의 부의 이전을 피하고자 하는 경제적 유인에 기인하는 것으로 해석된다. 둘째, 주주우선배정 방식하에서 발행사는 총액/잔액인수 계약을 체결하는 것으로 나타났다. 이는 실권주 인수 미달발생 위험에 따른 대주주의 잠재적인 경제적 손실을 최소화하기 위한 것으로 해석된다. 이때 상대적으로 명성이 낮은 증권사일수록 거래의 수임을 위하여 총액/잔액인수 계약을 체결하는데 적극적인 것으로 나타났다. 셋째, 주주우선 배정 방식 및 총액/잔액인수 계약의 경우, 상대적으로 저평가 정도가 높은 것으로 나타났다. 이는 유상증자의 확실한 성공을 원하는 대주주와 중개위험을 기피하고자 하는 증권사간 이해상충문제가 타협된 결과로 해석된다.

This study analyses how the economic interests of a company’s largest shareholders affect the choice of secondary equity offering (“SEO”) floatation methods, forms of underwriting agreements with investment banks, and ultimately, the new share issuance price in a SEO where the information asymmetry is high amongst the largest shareholders, investment banks and investors. Unlike price discovery through bookbuilding process, issuing companies and investment banks determine issuance price prior to the offering in Korea. The SEO floatation methods and forms of underwriting agreement are publicly disclosed. This study differs itself from previous studies in that it evaluates how the economic interests of the largest shareholders as well as potential conflicts of interests amongst SEO participants may impact the selection of SEO floatation methods and forms of underwriting agreement. Furthermore, this study, by presenting the drivers behind a SEO and by analysing its effects, is anticipated to contribute to future research related to securities issuance, which is one of the most important financial decisions for corporations. The largest shareholders are seeking not only economic profits from SEO but also noneconomic objectives such as strengthened management control of the corporation. Investment banks tend to prioritize the relationship with the largest shareholders of the issuing company over the interests of retail investors. The forms of SEO can be classified into rights offering, rights offering with under subscribed shares to be offered to the public(“ROUP”), public offering, and 3rd party allotment. There are two types of underwriting agreements which include underwriting agreements on a firm commitment basis and best efforts basis. This study excludes cases where SEO is based on 3rd party allotment as well as those cases where underwriting agreements are non-existing. This study examines which floatation method of SEO is preferred according to the stakes of the largest shareholders and also identifies the financial variables which may have impact on the floatation method of SEO and forms of underwriting agreement chosen. Firstly, based on the analysis of precedent SEOs, we found that the higher the stake of the largest shareholders or the healthier the profitability and financial structure of a company, rights offerings is most preferred and public offering is least preferred. ROUP comes in between the rights offerings and public offerings. The main reason behind such outcome comes from the economic incentives of the largest shareholders. The largest shareholders take advantage of the situation where they possess superior information on the company relative to the retail investors. When the largest shareholders have higher stakes and therefore more economic interests, they tend to get more involved in the SEO process which could affect the economic benefit of minority investors and try to maintain or increase their existing stakes or trade preemptive rights to pursue economic interests. When the largest shareholders have lower stakes and therefore less economic rights, as long as the management control is secured, they tend not to commit more capital to maintaining their stakes not to share potential economic gains with outside investors because they’ve already disposed of significant stakes. Instead they’d rather seek another investment opportunity. In addition, outside investors would consider the largest shareholders’ trading of preemptive rights negative so that public offering is likely a choice of SEO floatation method in this case. Secondly, under ROUP, issuers prefer underwriting agreements on a firm commitment basis to minimize largest shareholders’ potential economic losses associated with under subscribed shares. The largest shareholders influence issuers to negotiate with investment banks to reflect their interests in the underwriting agreement. The less reputable investment banks aggressively take the risk of entering into an underwriting agreement on a firm commitment basis to get mandated for the SEO. The largest shareholders prefer underwriting agreement which guarantees that new shares be fully subscribed not to suffer from losses associated with under subscription which in turn has a negative effect on stock prices. On the other hand, in the case of public offerings where retail investors participate, the economic interests of the largest shareholders are less of importance and thus, issuers are indifferent to either form of underwriting agreement. Thirdly, under ROUP and underwriting agreements on a firm commitment basis, the level of discount and underpricing of issuance price is higher than that of the other SEO methods. This is the outcome of compromise of the conflicts of interests between the largest shareholders who want guarantee of the success of SEO and investment banks which want to minimize their underwriting risks. On the other hand, under underwriting agreements on a best efforts basis, because investment banks do not bear underwriting risks and only focus on the sale of new shares, they are not sensitive to the issuance price so there is no incentive for them to reduce the level of discount and the issuance price.

본 논문은 지배주주가 가족인 한국의 대기업집단을 대상으로 어떤 계열사에 가족이 최고경영자(CEO)로서 재직하는지의 결정요인과 그러한 가족의 직접적인 경영권 행사가 기업의 성과 및 가치에 미치는 영향을 분석한다. 한국 대규모 기업집단의 방대한 자료를 활용하여 분석한 결과, 지배주주 가족의 소유권(cash flow rights)이 크고 그룹에 대한 출자비중이 높은 계열사일수록 가족이 CEO로서 재직할 가능성이 높게 나타난다. 하지만 지배주주 가족이 CEO인 경우 수익성(EBITDA)이 더 낮게 나타나 가족의 직접 경영은 오히려 기업성과에 악영향을 미친다. 또한 지배주주 가족이 CEO인 경우에만 가족의 소유권과 그룹에 대한 출자비중이 클수록 오히려 기업가치(Q 비율)가 낮게 나타난다. 이는 가족에 의한 소유와 경영의 일치가 오히려 지배주주로 하여금 그룹에 대한 통제권 유지에 몰입하게 하는 참호구축(entrenchment) 효과로 인해 대리인 문제가 발생 한다는 것을 암시한다. 마지막으로 지배주주 가족이 임원에 포함되지 않고 전문경영자가 CEO인 경우에 있어서만 기업가치가 높게 나타나 독립적인 전문경영인 체제가 기업가치 극대화를 위해서 가장 효과적인 수단임을 발견한다. 본 연구는 지배주주의 영향력이 막강한 기업집단에서 가족경영보다는 전문경영 체제가 보다 효율적임을 보여주었다는 데 그 의의가 있다.

To better understand the nature of family-owned firms, one must distinguish management from control rights (Villalonga and Amit, 2006). Also not all controlling sh-areholders in family firms serve as CEOs. When professional managers serve as CEOs of family firms, the controlling shareholders often assume the role of monitoring the hired managers. Therefore, these firms end up bearing some agency costs that incur between the owner and professional managers. While the owner-manager conflict can be mitigated in firms in which family members serve as CEOs (henceforth, ‘family CEO’), the agency problem between controlling shareholders and minority shareholders can be also intensified (Shleifer and Vishny, 1997). Taken all factors into consideration, family CEOs can affect firm performance in both positive and negative ways. By definition, controlling shareholders of any business groups face the dilemma whether to get involved in the firm management. And yet, not much research has been conducted on this issue as to address the question which is better for the firm. This must have been so perhaps because of data limitations. In fact, Lin and Hu (2007) is the only study that directly addresses the selection issue. However, their sample is limited to listed Taiwanese firms, not sufficient to account for general characteristics of business groups including unlisted firms. To the best of my knowledge, this paper is the first study of its kind to analyze the determinants of family CEO using information of all affiliatesboth listed and unlisted- belonging to the same business groups. When a family keeps control of a firm, its controlling shareholders can get involved in the management as CEOs or the like to maximize the sum of the value of the retained block and the private benefits obtained (Burkart, Panunzi, and Shleifer, 2003). If maximizing the former is intended, family CEO can positively affect firm performance as long as he/she has good management skills. But if maximizing the latter is intended, family CEO can be negatively related to firm performance. Stein (1989) and James (1999) develop a model illustrating the positive effect of long-term investors on firms’ investment efficiency especially when they are the members of the family that owns the firm. The study explains that such long-term investors can minimize myopic investment decisions by managers. Anderson and Reeb (2003) empirically find that firms with family CEOs outperform those with professional CEOs for this reason. On the other hand, controlling shareholders of family firms don’t tend to take enough advantage of competitive managerial labor market since they are likely to limit management control to their own family circles. Such practice of ‘nepotism’ can harm firm performance (Perez-Gonzalez, 2006). As such, existing theoretical and empirical studies about the effect of family CEO on firm performance are contradictory. To draw its own conclusion, this paper first investigates the precise determinants of family CEO before probing the question of family CEO’s effect on firm performance. Finally to reflect the endogenous nature inherent in family CEOs, the self-selection or reverse causality issue is addressed through modeling family CEO as an endogenous choice. Using the Korean business group data from 2001 through 2011, the following results are found. First, firms with higher cash flow rights of controlling shareholders and larger equity portion in affiliates are more likely to have family CEOs. This means that controlling shareholders tend to serve as CEOs to maximize their control rights over the business group as well as the value of their stake, supporting a proposition of Burkart et al. (2003). Second, family CEO negatively affects firm profitability measured by EBITDA. This implies that when controlling shareholders serve as CEOs, agency costs between themselves and minority shareholders increase. Also, only for firms with non-family CEOs, their investments have a significantly positive impact on EBITDA, indicating that professional CEOs commit more to efficient investments than family CEOs do. Third, for firms with family CEOs, higher cash flow rights and larger equity portion in affiliates are associated with lower firm values measured by Tobin’s q. This implies that the concentration of ownership and management by controlling shareholders induces agency problems due to the entrenchment effect, making them commit to maximizing control rights over the business group although the value of their shares is damaged. On the other side, for non-family CEO, larger equity portion in affiliates is associated with higher firm value, implying that professional CEOs invest more efficiently in affiliates’ equity than family CEOs do. But the effect of cash flow rights on firm values is insignificant for these firms. Just like the results on EBITDA, investments have a significantly positive impact on firm values only for the sample with non-family CEO. Fourth, controlling the endogeneity of family CEO through Heckman (1979)’s model, family CEO still negatively affects value as well as profitability of firm. Fifth, through a robustness check we found that firm profitability worsens only when family CEO runs the firm; if professional managers are CEOs and family members are not involved in the management position, those firms show higher value. This finding suggests that securing an independent professional management system without family members can be the most effective way to maximize corporate value in the business group. Overall, the findings indicate that when controlling shareholders with potentially powerful influence over the business group directly manages the firm, they are highly like to be driven by the self-serving incentive to maximize their controlling rights over the business group, rather than to commit themselves to increasing firm value through efficient investments. By drawing this conclusion, this study sheds more light on this unexplored yet salient question of which organizational structure, with or without family CEOs, is more efficient.

This paper empirically studies agency con‡ict by using a shareholder approval rule gov- erning private placements. NASDAQ and other exchanges require shareholder approval for discounted, placements that make up more than 20% of existing shares. I document a distribution discontinuity around the threshold and identify many managers who avoid approval by keeping the fraction of new shares just below 20%. Shareholder avoiding …rms have negative and 4.43% lower announcement day abnormal returns than …rms that gain approval. Moreover, shareholder avoiding …rms are less distressed and issue at higher discounts. Overall, my …ndings suggest agency problems in privately issued equity.

This paper examines the effect of ownership structure of a controlling shareholder on the financial constraints of non-financial firms in 22 economies for the 1982-2009 period. We find that the overinvestment propensity of a controlling shareholder becomes less severe with an increase in cash-flow rights along with a greater deviation between control rights and cash-flow rights, which makes a firm less financially constrained. Our results suggest that firms in legal environment with stronger shareholder protections are less likely to have the entrenchment of the controlling shareholders, while minority shareholders in this legal origin benefit from loosened financial constraints.

This study is an empirical study regarding how the financial policies, which are represented by debt ratio, dividend policy, and ownership structure, affect the enterprise value of listed companies having different growth opportunities. It was conducted on the manufacturing companies listed in the Korean Stock Exchange from 2001 to 2011. Based on the MBE ratio, which is a variable for measuring growth opportunities, this study conducted a regression analysis by dividing the upper 40 % group with many growth opportunities and the lower 40% group with fewer growth opportunities. As a result, it was found that dividends have a significantly positive (+) effect on enterprise value regardless of growth opportunities, and insider equity has a nonlinear relationship with enterprise value. It is interesting to note that the debt ratio has a significant negative (-) relationship with enterprise value in the group having many growth opportunities, whereas in the group having fewer growth opportunities, the debt ratio has a significantly positive (+) relationship with enterprise value. We have also conducted robustness analysis by dividing groups into an upper 20% and a lower 30% based on the MBE ratio in order to increase the reliability of the research. In the analysis, although there are differences in numerical values, it shows similar results; that is, in the group having many growth opportunities, the debt ratio has a negative (-) relationship with enterprise value, whereas in the group having fewer growth opportunities, the debt ratio has a positive (+) relationship with enterprise value. Those results coincided with the research results of McConnell and Servaes (1995) which was conducted on the NYSE and AMEX-listed companies. It proves that such phenomena could be observed in newly emerging markets such as Korea.

본 연구는 지배주주의 소유-지배 괴리도가 기업 가치에 미치는 영향을 규명하기 위해 2001년부터 2009년까지 공정거래위원회가 발표한 대규모 기업집단 소속 232개 기업을 대상으로 패널분석을 실시하였다. 실증분석의 주요 결과는 다음과 같다. 첫째, 지배주주의 소유-지배 괴리도와 기업가치(Tobin's Q, 시장가치 대비 장부가치) 간에는 부(-)의 유의적인 관계가 존재하였다. 본 결과는 지배주주가 소유지분을 초과하여 지배권을 갖는 경우 지배주주의 사적 이익을 위해 기업 자산을 유용하여 기업가치가 감소함을 제시하고 있다. 둘째, 지배주주의 소유-지배 괴리도는 기업가치의 증가율(3년간과 4년간의 기업가치 증가율)과 부(-)의 유의적인 관계가 존재하였다. 이는 지배주주가 소유지분을 초과하여 지배권을 갖는 경우 지배주주의 안주주의 영향으로 인해 단기적으로 뿐만 아니라 장기적으로도 기업가치에 부정적인 영향을 미칠 수 있음을 시사하고 있다. 셋째, 외국인지분이 증가할수록 지배주주의 소유-지배 괴리도와 기업가치 간 부(-)의 관계는 완화되는 것으로 나타났다. 본 결과는 외국인투자자가 기업 경영에 대한 효율적 감시활동을 통해 경영자의 사적 소비를 억제함으로써 소유-지배 괴리도가 기업가치에 미치는 부(-)의 영향을 감소시키고 있음을 보여준다.

The paper aims to explore the relationship between control-ownership disparity and firm value in Korea. Using nine-year longitudinal data of 232 firms from large business conglomerates during 2001-2009, this study finds that control-ownership disparity has negative effects on firm value, suggesting the likelihood that controlling shareholders with high control rights in excess of their ownership rights may expropriate firm resources in order to seek their private benefit. The negative effect of control-ownership disparity is also found with regard to the growth rate of firm value, which implies that due to controlling shareholders' entrenchment, control-ownership disparity will lead to a long term decrease in firm value. Finally, the moderating role of foreign investors is supported since foreign ownership mitigates the negative effect of control-ownership disparity on firm value. This finding suggests that foreign investors' monitoring over controlling shareholders may reduce the likelihood of controlling shareholders expropriation and thus, mitigate the negative impact of control-ownership disparity on firm value.

We create a real options model of leveraged investments to examine the eects of risky debt on investments and disinvestments (defaults). An investor nances a fraction of the investment cost with debt newly issued at the time of investments. The zone between investment trigger and disinvestment trigger is determined by the equity investor who has both the investment option and the disinvestment option. The zone between two triggers shrinks with leverage. The leveraged investor brings the disinvestment trigger forward; the value of waiting to disinvest is more valuable with risky debt. The leveraged investor also moves the investment trigger forward because the equity maximizer takes no account of the value of waiting for a lender. The leveraged investor seeks a lower uncertainty premium; with leverage, the investor considers less amount of equity investment even though the investor assumes the nancial risks. On the other hand, safe debt implies no real eects on the investment decisions.

본 연구는 지배구조가 좋을수록 기업의 대리인 비용이 감소한다는 기존의 연구결과를 바탕으로 2002년부터 2006년까지 유가증권시장에 상장한 제조기업들을 대상으로 개별기업의 지배구조점수를 통해 대리인 문제가 기업의 보유현금에 미치는 영향을 실증적으로 분석했다. 그 결과, 지배구조가 좋은 기업일수록, 그리고 특히 주주권리보호가 우수한 기업일수록 보유현금비율이 유의적으로 낮았다. 기업지배구조의 내생성을 통제한 이후에도 동일한 결과를 얻어 지배구조가 좋을수록 보유현금을 축적함으로써 사적 이익을 추구하려는 경영자의 유인을 효율적으로 감시할 수 있다는 대리인 이론의 주장을 지지했다. 재벌기업의 경우 비재벌기업보다 현금성 자산을 유의적으로 낮게 보유하였고 기업지배구조의 영향력도 더 컸다. 한편, 재벌기업의 그룹 내 기타 계열사들의 보유현금비율이 높을수록 해당 기업의 보유현금비율이 유의적으로 낮아져 재벌기업에 내부자본시장이 존재함을 간접적으로 시사했다.

Two dominant theories explaining firms’ different level of cash holdings are the static trade-off model and the pecking order theory. According to the former, a firm holds cash and cash equivalent assets when the subject firms’ managers can easily enjoy the incentives from the transactions of such assets and the precautionary motive outweigh the cost and benefit of cash holdings. In contrast to the static trade-off model, the pecking order theory asserts that the level of firm’s cash holdings is determined passively and that the optimal level of cash holdings does not exist since a firm first expends on the profitable investment opportunities and then pays off the debt and accumulates cash holdings with what is left (Myers and Majluf (1984)). Most empirical studies have also placed emphasis on the static trade-off model and the pecking order theory. Both models exhibit exceedingly similar results that smaller-sized firms tend to increase the level of cash holdings, implying a greater degree of information asymmetry existing in a subject firm especially when its investment and R&D expenditures are projected to be high. Higher expenditures subsequently lead to higher future capital requirement and higher possibility of liquidity shortage owing to more volatility in past cash flows (Opler et al. (1999), Gong (2006)). On the other hand, as Myers and Rajan (1998) have mentioned, managers in a firm with a higher possibility of an agency problem due to the separation of ownership and management are likely to have an incentive to hold more cash assets. This is because cash and its equivalents are the easiest types of assets with which managers can exercise their discretional power.. Conversely, at a firm with more transparent corporate governance, on the other hand, its management has less incentive to hold more cash assets as a way to expand his/her discretional power since, then, such firm closely monitors management’s transactions, which reduces the possibility of the agency problem. As such, based on the previous studies, we examine whether the agency theory, as well as the static trade-off model and pecking order theory, is also a significantly influential factor in deciding the level of cash holdings for Korean companies. Most studies consider only partial elements of corporate governance such as ownership structure including shareholding ratios of management, or institutional investors and foreign investors as proxy variables for the possibility of agency problem. Unlike those preceding studies, we use a unique data set of the firm-level corporate governance scores on an annual basis as a proxy variable for the degree of agency problem. The data are being provided by the Korea Corporate Governance Service (KCGS) every year, following the evaluation of listed firms’ ownership structures and governance structures. In addition, we provide an empirical evidence on how the agency problem affects a firm’s level of cash holdings based on our analysis of 2,541 sample firms listed in the Korea Stock Market between 2002 and 2006. We collect an individual firm’s annual financial statement data, stock price data, and composite data with respect to Korean business groups (aka. chaebols) from KisValue II and FnDataGuide. The annual ratio of average cash holdings to total assets ranges from 9.34% to 10.42%. We also consider the standardized score of shareholder protection, board of directors, corporate disclosure (transparency), auditing organization, and earnings distribution which altogether constitute the total corporate governance score. By controlling various factors of the static trade-off model and the pecking order theory, we find that firms with sound corporate governance, especially those that enforce strong shareholder protection rules, tend to reduce the level of cash holdings. Moreover, we also undertake various robustness tests to control for the effects of endogeneity problems of corporate governance and the characteristic of panel data. Furthermore, we provide additional evidence reinforcing our results and the agency theory. We conclude that chaebols show lower levels of cash holding ratios than non-chaebols do, if all else equal. The tendency of the lower the level of cash holdings the better corporate governance the firm has is found more apparent in chaebol firms than in non-chaebol firms. Further, as the level of cash holdings of the other group-affiliated firms increases, the firm’s cash holding ratio becomes lower, implying that the static trade-off model and the pecking order theory have less influence on the cash holdings due to the existence of internal capital markets within Korean chaebol groups. In other words, internal capital markets within chaebols indeed have a substantial impact on the group-affiliated firms and allow them to maintain lower level of cash holdings than those of non-chaebols, all else equal. Overall, this paper provides the evidence strongly supportive of the agency theory and shows that differences in the intensity of agency problem across firms play an important role in explaining the different levels of firms’ cash holdings.

This study examines whether there are agency conflicts within firms that issue preferred stocks, and whether agency conflicts affect to tax avoidance levels of the firm. Firms with preferred stocks have agency problems because they can consolidate managers’ rights compared to firms with only common stocks. This paper studies the degree of tax avoidance of firms that issue preferred stocks and finds that because of the existence of differentiated voting rights in the firm, the degree of tax avoidance is reduced.