Use this URL to cite or link to this record in EThOS: https://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.736081
Title: Corporate governance and political economy in South Korea : family ownership, control of business groups, and state-led capitalism
Author: Kim, Dongjeen
Awarding Body: University of Oxford
Current Institution: University of Oxford
Date of Award: 2017
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Abstract:
The evolving nature of the Korean 'chaebol' - both a business group and the founding family who control the corporation - continues to intrigue scholars of corporate governance (Khanna and Yafeh, JEL 2007). In my thesis, I investigate these multi-generational controlling families to explain the chaebol's significance in the historical evolution of South Korea's political economy during the 20th century. My research first describes the origins of chaebol entrepreneurs and details their role in the growth of light industry before the the rise of state-led industrialisation during the social revolution of the 1960s in South Korea. I then consider the specific institutional features which appear to work against family control, even though they would ultimately support its proliferation: 1) progressive politics; 2) inheritance tax; and 3) ownership dispersion. Notably, my analysis of these distinctive institutions provides a clearer understanding of the contemporary behavior of the chaebols and their ability to maintain family control over many decades of growth. In order to better understand the role of controlling families, during the state-led industrialisation period (1961-1988), I analyse their corporate networks and their ability to wield political power. To do so, I employ an unconventional source of evidence: a database of marriages among chaebol families. This research is theoretically grounded in the contact capabilities hypothesis advanced by Amsden (1989) and Guillén (2001a, 2001b with Kock). My scholarly approach complements parallel research on human networks within the state. My findings have implications for: 1) the epochal nature of chaebol-political networks; and 2) the market reaction to such network events, thus demonstrating the economic significance of these informal networks. In my last chapter on the post-1998 era of financial liberalisation, I explore the evolution of the ownership structure within the business group as it relates to policy history. I do this through an analysis of The Holding Company Act of 1999, and show how the controlling families in South Korea found novel ways to use the Act to support their family ownership and corporate control in spite of the original intentions of the regulators. As I show, share buyback programmes, first popularized in Anglo-American financial markets, were crucial to the maintenance of chaebol. As it turns out, liberal policies, imported from the West, proved no more able to limit family capitalism in South Korea than domestic policy had been during the preceding state-led industrialisation era. Nonetheless, activist investor has a special role to play.
Supervisor: McKenna, Chris ; Esteves, Rui Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID: uk.bl.ethos.736081  DOI: Not available
Keywords: Corporate Governance ; Political Economy ; Economic History ; Corporate Finance ; Event Study Analysis ; State-led Industrialisation ; Shareholder Activism ; Abnormal Equity Returns ; Contact Capabilities Hypothesis ; Family Capitalism ; Holding Company Act ; Family Business Groups ; Activist Investor
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