This paper investigates a long-term value implication of business group affiliation. In order to secure comparability between business group affiliated firms and independent firms we employ matching estimator technique. It selects firms with business characteristics most similar to chaebol firms to create
control group of firms. We find that the long-run performance of chaebol affiliated firms is superior to that of control firms although the two groups are very similar at the beginning of sample period. The differential performance between the two groups has been caused by changes in firm characteristics over
time. Difference-in-difference estimators on important firm characteristics indicate that chaebol affiliated firms become larger and more profitable, grow faster with more investments, have higher debt, and become to have more foreign ownership as time passes. The results suggest that a higher profitability and more investment make chaebol firms grow faster, which leads to a larger firm size. Besides, chaebol firms seem to benefit from tax shield and monitoring effects due to a higher level of debt and avoid the entrenchment of owner managers by a higher foreign ownership. However, regressions using difference variables indicate that business group affiliation by itself is not a value increasing event.
Keywords: Business Group, Firm Value, Firm Characteristics, Matching Estimator, Difference-in-Difference Estimator
JEL Classification: G01, G30, G34
학회소식
공지사항
[2011년 제 4차] Is Business Group Structure Inefficient?: A Long-Te
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게시일 :
2011-12-07