Financial Weakness and Product Market Performance: Internal Capital Market Evidence

AbstractUsing a data set of Korean business groups in the period 1999–2006, just after the Asian Financial Crisis, this study shows how business groups’ financial leverage can lead group-affiliated firms to lose market share to industry rivals. This analysis reveals that the negative effect of group leverage is greater when an affiliated firm is financially weak. Additionally, high group leverage is more detrimental to firms operating in fast-growing industries, discouraging affiliated firms from investing while encouraging their rivals. The results suggest that groups’ financial positions encompass a substantial strategic dimension of group-affiliated firms.

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The Effect Of Internal Capital Market Of Korean Large Business Groups On Investment Efficiency

Journal of Applied Business Research (JABR) ◽

10.19030/jabr.v33i5.10014 ◽

2017 ◽

Vol 33 (5) ◽

pp. 903-918

Author(s):

Minwoo Lee ◽

Yuwon Choi ◽

Sanghyuk Moon

Keyword(s):

Capital Markets ◽

Capital Market ◽

Stock Price ◽

Business Groups ◽

Internal Capital Markets ◽

Investment Efficiency ◽

Internal Capital Market ◽

Factors Affecting ◽

Controlling Shareholders ◽

Internal Capital

This study examines whether the effect of funding through internal capital markets on investment efficiency is differentiated by the incentives of controlling shareholders as measured by the divergence between cash flow rights and voting rights of controlling shareholders (hereafter, wedge). To empirically analyze hypotheses of this study, 1,189 firm-year observations were collected from Korean firms listed on the Korea Composite Stock Price Index (KOSPI) belonging to a large business group designated by the Korea Fair Trade Commission over the period from 2005 to 2012. The results of the analysis are as follows. First, we find that the magnitude of internal funding, as measured by total payables to the related parties, is positively (+) associated with investment inefficiency. Second, the interaction variables of total payables to the related parties and the wedge have a significant positive (+) effect on investment inefficiency. In other words, the deterioration of investment efficiency due to the increase in total payables to the related parties was mainly caused by firms with a big wedge. This result suggests that the effect of internal capital markets on investment efficiency of large business groups may be differentiated by the wedge that is proxy of the controlling shareholder’s incentive. This study provides additional evidence on previous studies on the investment efficiency of large business groups by considering both the internal capital market and incentives for funding using the internal capital market, which are important factors affecting the investment of large corporate groups. Also, the results of this study are expected to provide implications for the regulatory policy of large business groups which have recently become an issue in Korea.

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Korean Business Groups and Performance of Group-Affiliated Professional Sport Teams: Focusing on the Asian Financial Crisis

Sustainability ◽

10.3390/su12176888 ◽

2020 ◽

Vol 12 (17) ◽

pp. 6888

Author(s):

Youngshin Woo ◽

Wooseok Choi ◽

Insik Min ◽

Mugoan Jeong

Keyword(s):

Financial Crisis ◽

Business Groups ◽

Professional Sports ◽

Asian Financial Crisis ◽

Time Interval ◽

Sports Teams ◽

Sport Teams ◽

Athletic Success ◽

And Performance ◽

The Impact

This study examines the impact of Korean business groups, chaebols, on the sporting performance of their affiliated professional sports teams using game data from 1983 to 2013. We investigated whether or not chaebol ownership of professional sports teams is more efficient than non-chaebol ownership in achieving athletic success on the field of play. Our empirical evidence found that the chaebol-affiliated teams are more likely to be the league winners or finalists than non-chaebol teams are. We also tested the relationship between the financial crisis in the wider economy that deflates firm resources and athletic outcomes in the affiliated teams. In the tests, which divide the sample period into three 10-year periods, the results of two sub-samples (1983–1993 and 2004–2013) were in line with previous results. We, however, identified an exception when chaebol teams did not play in more final matches of a league between 1994 and 2003, the time interval that includes the period of drastic restructuring of business groups during the 1997 Asian financial crisis.

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Capital Market Integration In Some Asean Countries Revisited

Jurnal Manajemen ◽

10.24912/jm.v22i2.359 ◽

2018 ◽

Vol 22 (2) ◽

pp. 205 ◽

Cited By ~ 2

Author(s):

Robiyanto Robiyanto

Keyword(s):

Financial Crisis ◽

Financial Market ◽

Capital Markets ◽

Capital Market ◽

Market Integration ◽

Global Financial Crisis ◽

Asian Financial Crisis ◽

Capital Market Integration ◽

Financial Market Integration ◽

Asean Countries

Financial market integration in Southern Asia especially in ASEAN main member countries still attractive to scrunitized. Most of these countries were devastated during severe regional financial crisis in 1997 but global financial crisis in 2008 have different impact toward these countries. The finding shows that comovement were exist among Indonesia, Malaysia, Singapore and Thailand’s capital market during January 1997 to December 2013 period. Comovement still exist during post Asian financial Crisis 1997 and post global financial crisis 2008 period. This study conclude also that degree of integration between some ASEAN capital markets have fading out after global financial crisis in 2008. Hence, investor could formulate a portfolio which consist of stocks across ASEAN capital markets.

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