Building an Integrated Infrastructure in the Korean Peninsula
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Does the Market React Differently to Chaebol Firms?
The Journal of Applied Business Research – September/October 2014 Volume 30, Number 5 Does The Market React Differently To Chaebol Firms? Heejin Park, Hanyang University, South Korea Jinsoo Kim, Hanyang University, South Korea Mihye Ha, Hanyang University, South Korea Sambock Park, Hanyang University, South Korea ABSTRACT Based on a sample of Korean firms listed on the KOSPI and KOSDAQ from 2001 to 2011, we examined whether the affiliation of a firm with a Chaebol group affects the sensitivity of stock prices to earnings surprises. We found that the market response to positive (negative) earnings surprises is more positive (negative) for Chaebol firms than for non-Chaebol firms. In addition, we investigated how intra-group transactions affect the ERCs of Chaebol firms by comparing with those of non-Chaebol firms. Our results show that the intra-group transactions of Chaebol firms are positively related to ERCs under both positive and negative earnings surprises. However, we did not find the same results from the analyses of non-Chaebol firms. Keywords: Chaebol Firms; Earnings Response Coefficient (ERC); Earnings Surprises; KOSPI; KOSDAQ 1. INTRODUCTION he aim of this study is to examine how differently the market reacts to earnings surprises of Chaebol firms compared to those of non-Chaebol firms. Although there is no official definition of Chaebol, T firms are perceived as Chaebol if they consist of a large group and operate in many different industries, maintain substantial business ties with other firms in their group, and are controlled by the largest shareholder as a whole. The definition used to identify Chaebol firms is that of a large business group established by the Korea Fair Trade Commission (KFTC) and a group of companies of which more than 30% of the shares are owned by the group’s controlling shareholders and its affiliated companies. -
East Asian Economies and Their Philosophy Behind Success: Manifestation of Social Constructs in Economic Policies
Journal of International Studies © Foundation of International Studies, 2017 © CSR, 2017 Scientific Papers Lajčiak, M. (2017). East Asian economies and their philosophy behind success: Journal Manifestation of social constructs in economic policies . Journal of International Studies, of International 10(1), 180-192. doi:10.14254/2071-8330.2017/10-1/13 Studies © Foundation East Asian economies and their philosophy of International Studies, 2017 behind success: Manifestation of social © CSR, 2017 Scientific Papers constructs in economic policies Milan Lajčiak Ambassador of the Slovak Republic to the Republic of Korea Slovak Embassy in Seoul, South Korea [email protected] Abstract. The study contributes to broader conceptualization of East Asian Received: December, 2016 economies by elaboration of sociocultural and institutional approaches, 1st Revision: explaining differences between Western and East Asian geography of thinking January, 2017 and focusing on the manifestations of Confucian values and their social Accepted: February, 2017 constructs into organizational patterns of economic policies and business culture within East Asian economies. The analysis demonstrates that these factors has DOI: strongly impacted successful industrialization processes in East Asian countries 10.14254/2071- and served as a strategic comparative advantage in their economic developmental 8330.2017/10-1/13 endeavor. The paper is claiming that economic policies of the region would never be so effective if they would not be integrated into social organizational models of these countries. The ability of East Asian leaders to understand weaknesses and strengths of their societies in terms of market forces and to tap on their potential through economic policies was a kind of philosophy behind their success. -
Ideals and Reality in Korean Continental Diplomacy
Ideals and Reality in Korean Continental Diplomacy: A Theoretical and Historical Review on Gas Pipeline Projects Involving South Korea Paper for the International Studies Association Hong Kong 2017 [SD18] Eurasian Continentalism, the Pacific Century, and the Future of World Affairs June 17 (Sat), 4:00 - 5:45 PM ┃ CPD-2.46, Centennial Campus, The University of Hong Kong --- Preliminary Draft --- Please, do NOT cite or circulate without author’s permission. Eunjung Lim Assistant Professor College of International Relations, Ritsumeikan University E-mail. [email protected] 【Abstract】 Ideas for connecting itself to trans-continental gas pipelines and establishing a regional hub for gas trade market in Northeast Asia and have been popular topics among many policymakers, political leaders, and policy experts in South Korea over the last decades regardless of their ideological gaps. Also, some other infrastructure such as railroads and electricity grid have been envisioned. Other than any other infrastructure, cooperation for trans-continental gas pipelines has made some significant progress over the past decade. Nonetheless, related discussions involving South Korea or led by South Korea have remained largely abstract, normative and declaratory. It would be academically interesting and meaningful to investigate the disparity between South Korea’s aspirations for connecting itself to trans-continental gas pipelines and the political economic reality the country actually faces when the newly-inaugurated Moon Jae-in administration considers reviving his predecessors’ dreams. This paper begins with an examination of the theoretical background of South Korea’s aspiration for connecting itself to trans-continental gas pipelines. After that, it historically reviews South Korea’s interests in Russian gas and pipeline projects. -
Korea Chaebols
View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by K-Developedia(KDI School) Repository Emerging Market Spotlight November 2010 The Chaebols in South Korea: Spearheading Economic Growth South Korea has witnessed an incredible transformation in the Fast Facts three decades spanning from the Chaebols are large multinational family-controlled 1960s to 1990s, evolving from an conglomerates in South Korea, which have enjoyed strong impoverished country to a governmental support. developed high-income economy today. Often referred to as the The word Chaebol literally means “business association”. “Miracle of the Han River”, this President Park Chung Hee (1961-1979) widely propagated remarkable turnaround was and publicized the chaebol model of state-corporate achieved through an aggressive, alliance. outward-oriented strategy, focusing on developing large-scale The Chaebols have invested heavily in the export-oriented industrial conglomerates or manufacturing sector. chaebols. Some well-recognized South Korean conglomerates boasting global brand names are Samsung, Hyundai and Today, the chaebols have become LG. multinational powerhouses with a global footprint. And with this, The chaebol model of state-corporate alliance is based on South Korea boasts of an economy the Japanese Zaibatsu system, which encouraged economic that ranks 15th globally in nominal development through large business conglomerates from 1968 until the end of the World War II. terms and 13th in terms of Purchasing Power Parity (PPP). Paradigm shift in the South Korean economy The first half of the 20th century was a tumultuous, war-ravaged period for the country, punctuated by a 35-year Japanese colonization of the country, which ended with Japan’s defeat in World War II. -
Chaebols): Resource-Based and Institutional Perspectives on the Causes of Diversification
Diversification Strategies and the Formation of Korean Big Business Groups (Chaebols): Resource-based and Institutional Perspectives on the Causes of Diversification Jaeyong Song and Dong-Sung Cho Discussion Paper No.9 Jaeyong Song Dong-Sung Cho Assistant Professor of Management Professor of Management Columbia Business School School of Business Administration Seoul National University Discussion Paper Series APEC Study Center Columbia University In the 1990s, probably no other firms in emerging economies have drawn more attention than Korean big business groups, or “chaebols.” When Korea emerged as a new industrial power, boasting the 11th largest economy in the world in 1996, chaebols were praised as drivers of this unprecedented, rapid economic growth. In recent years, the chaebols’ dramatic international expansion often made headlines in business magazines and newspapers all over the world. Thanks to the chaebols’ explosive foreign investments, Korea numbered among the largest foreign investors in many countries, including the United Kingdom. Impressed by this rapid expansion in overseas markets, particularly in high-tech industries such as semiconductors, Business Week (1995a) featured a cover story and analyzing the chaebols’ “success formula.” Moreover, emerging or transition economies such as China and Russia attempted to adopt a Korean economic development model based on chaebols, encouraging their own large firms to become chaebol-like diversified business groups (Business Week, 1995b; Economist, 1997). Some scholars supported such efforts to imitate Korean-style big business groups, praising chaebols as a new organizational form (Orru, Biggart, and Hamilton, 1991). Others lauded the chaebol as a legendary success story (Khanna and Palepu, 1997), some arguing that they were more appropriate than focused firms for late industrializing economies (Amsden, 1997). -
Chaebol Restructuring and Family Business in Korea
Chaebol Restructuring and Family Business in Korea Kim KyWon Department of Economics, Korea National Open University KOREA I . Introduction The purpose of this paper is to examine tbe restructuring process of the Korean chaebol (family-managed conglomerates) and its impact on family business practices since the outbreak of the 1997 financial crisis in Korea. In November of that year, the financial crisis forced the Korean government lo ask the International Monetary Fund (IMF) for an emergency bailout loan. Since then, the restructuring of the corporate sector, particularly the chaebol, has been an u(gent lask for the Korean economy. This task was necessitated by market forces, and there was also a strong demand by the majority of the Korean public. Furthermore, it was onc of the conditionalities of the IMF loan. Michel Camdessus, managing director of the IMF at the time, once called for the dismantling of the chaebol, even though he later toned down his statement. Deeper analy.sis has yet to be made about the underlying causes of the Korean financial crisis, the relative irnporlance of each cause, and the relationships among 3 them. However, a consensus is now made among economists that extemally, the hastily implemented financial liberalization, including capitnl ularket opening, was responsible for the crisis, and that internally, structural defects in the corporate sector were also to blame. In 1997, Korea was experiencing 11 series of chaebol bankruptcies running up to the crisis. That is why virtua:Jy everyone accepted tile necessity of chaebol restructuring when it was proposed. In this regard, however, it is worth mentioning that the chaebol were principal engines that had powered the rapid economic groVvih of the past several decades and had their own raison d'etre in internal and external contexts, which \cd to tbe serious controversies, with respect to the details of the restructuring, such as the goals, methods, and pace. -
Korea's Energy Insecurities
K OREA ’ S E NERGY I NSECURITIES KOREA’S ENERGY INSECURITIES Professor Kent Calder, an expert in East Asian economic and security matters, has addressed profound implications of the energy problems faced by the two OMPARATIVE AND Kent E. Calder C Koreas. Professor Calder points out that "energy lies at the heart of virtually all policy approaches to the Korea peninsula’s future." Professor Calder has provid- REGIONAL PERSPECTIVES ed us with an important and timely contribution to understanding contemporary Korean peninsula issues which will be valuable reading for not only policy mak- ers but also the general public. Kent E. Calder –– Ahn Choong Yong, Professor of Economics, Chung Ang University An elegant analysis of the paradigm of energy insecurity—the Korean Peninsula. Calder clinches the case for building on the six-party process to broad regional cooperation. –– William Rogers, Arnold & Porter LLP KOREA ECONOMIC INSTITUTE SPECIAL 1201 F Street, NW, Suite 910 Washington, DC 20004 STUDIES SERIES: 3 Telephone (202) 464-1982 • Facsimile (202) 464-1987 • www.keia.org Korea’s Energy Insecurities Comparative and Regional Perspectives Kent E. Calder Korea Economic Institute ■ 1201 F Street, NW, Suite 910 ■ Washington, DC 20004 Telephone 202/464-1982 ■ Facsimile 202/464-1987 ■ Web address www.keia.org The Korea Economic Institute of America (KEI) is registered under the Foreign Agents Registration Act as an agent of the Korea Institute for International Economic Policy, a public policy research foundation in Seoul established by the government of the Republic of Korea. This material is filed with the Department of Justice, where the required registration statement is available for public inspection. -
South Korea's Experience with International Capital Flows
This PDF is a selection from a published volume from the National Bureau of Economic Research Volume Title: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices and Consequences Volume Author/Editor: Sebastian Edwards, editor Volume Publisher: University of Chicago Press Volume ISBN: 0-226-18497-8 Volume URL: http://www.nber.org/books/edwa06-1 Conference Date: December 16-18, 2004 Publication Date: May 2007 Title: South Korea's Experience with International Capital Flows Author: Marcus Noland URL: http://www.nber.org/chapters/c0155 10 South Korea’s Experience with International Capital Flows Marcus Noland South Korean economic performance over the last four decades has been nothing short of spectacular. During this period the country experienced only two years of negative growth—1980, in the wake of the second oil shock and the assassination of President Park Chung-Hee, and 1998, in the midst of the Asian financial crisis (figure 10.1). Between the initiation of a wide-ranging economic reform program by Park in 1963 and the financial crisis in 1997, real per capita income growth measured in purchasing power adjusted terms averaged more than 6 percent annually, and per capita income stood at more than eight times its level when reforms began. According to the Penn World Tables, at the start of that period the coun- try’s income level was lower than that of Bolivia and Mozambique; by the end it was higher than that of Greece and Portugal.1 Most economists would probably subscribe to the rough notion that more complete markets are preferable to less complete markets. -
Tunneling Through Trademarks*
* Tunneling Through Trademarks Sojung Kim† and Woochan Kim‡ First Draft: August 2019 This Draft: April 2021 Abstract This study documents how trademarks can be used to benefit controlling families at the expense of outside minority shareholders. Using a sample of business groups in Korea, we find evidence in support of this. First, firms are more likely to be licensor firms if the controlling family holds higher cash flow rights. Second, firms are more likely to be licensee firms and subject to higher royalty payments if their controlling family’s cash flow rights are further below those in the licensor firms (i.e., higher cash flow rights differentials) and if their sales volumes are larger. Third, shareholder distributions (dividend payouts and stock repurchases) and market values are negatively associated with royalty payments in firms with higher cash flow rights differentials. Lastly, these results manifest more significantly in pure holding company groups, where the licensor firms have no business operation of their own and, therefore, rely more heavily on trademark revenue. Keywords: Trademark royalties, tunneling, holding companies, business groups, cash flow rights, dividends JEL classification: G3, G32, G34 * We thank Nicolas Eugster, Peter Swan, and the conference participants at the 3rd Sydney Banking and Financial Stability Conference, the 32nd Australasian Finance and Banking Conference, the 2020 Financial Management Association Annual Conference, and the seminar participants at Korea University Business School. We also note that this work was supported by the Korea University Business School and the Ministry of Education of the Republic of Korea (National Research Foundation of Korea grant number NRF- 2019S1A5A2A01034994). -
Chaebols and Firm Dynamics in Korea
Chaebols and firm dynamics in Korea Philippe Aghion, Sergei Guriev, Kangchul Jo Abstract We study firm dynamics in Korea before and after the 1997-98 Asian crisis and pro-competitive reforms that reduced the dominance of chaebols. We find that in industries that were dominated by chaebols before the crisis, labor productivity and TFP of non-chaebol firms increased markedly after the reforms (relative to other industries). Furthermore, entry of non-chaebol firms increased significantly in all industries after the reform. Finally, after the crisis, non-chaebol firms also significantly increased their patenting activity (relative to non-chaebol firms). These results are in line with a neo-Schumpeterian view of transition from a growth model based on investment in existing technologies to an innovation-based model. Keywords: Schumpeterian growth, chaebols, Asian crisis JEL Classification Number: O43, L25 Contact details: Sergei Guriev, One Exchange Square, London EC2A 2JN, United Kingdom Phone: +44 20 7338 6805; Fax: +44 20 7338 6111; email: [email protected] Philippe Aghion, College de France and London School of Economics Phone: +33 1 44 27 17 06; email: [email protected] Kangchul Jo, London School of Economics Phone: +44 7477 006402; email: [email protected] Sergei Guriev is Chief Economist at the European Bank for Reconstruction and Development, Professor of Economics at the Institut d’´etudes politiques de Paris (Sciences Po) and Research Fellow at the Centre for Economic Policy Research (CEPR). Philippe Aghion is a Professor of Economics at the College de France and London School of Economics. Kangchul Jo is a doctoral student at London School of Economics. -
Family Firms, Chaebol Affiliations, and Corporatesocial Responsibility
sustainability Article Family Firms, Chaebol Affiliations, and Corporate Social Responsibility Haeyoung Ryu 1 and Soo-Joon Chae 2,* 1 Department of Business Administration, Hansei University, Gunpo-si 15852, Korea; [email protected] 2 Department of Business Administration & Accounting, Kangwon National University, Chuncheon-si 24341, Korea * Correspondence: [email protected]; Tel.: +82-33-250-6172 Abstract: This study analyzes the corporate social responsibility (CSR) activities of family-owned firms by investigating public companies in Korea. By nature of their governance structures, which are aligned with the interests of their shareholders and management, family firms are managed from a long-term perspective based on a sense of ownership. While CSR implementation entails investment costs, it ultimately increases firm value by enhancing the firm’s reputation and brand image. As such, family firms are expected to be more active than non-family firms regarding CSR investments. We conducted an empirical analysis based on the Korean Economic Justice Institute Index (KEJI Index) from the Citizens’ Coalition for Economic Justice and found that family firms’ CSR scores were higher than those of non-family firms. This indicates that family firms are relatively more active in their CSR activities, as they are managed from a long-term viewpoint. However, family firms classified as large-scale corporate groups (chaebols) had lower CSR activity levels. This is because when family firms are classified as corporate groups, they can enjoy monopolistic market positioning through their subsidiaries, and are thus more likely to utilize the resources originally required for CSR in other projects that conform to the pursuit of firm interests. -
The Political Economy of South Korean Long-Term Development
Journal of Contemporary Asia, 2014 Vol. 44, No. 4, 711–734, http://dx.doi.org/10.1080/00472336.2014.883421 From Miracle to Crisis and Back: The Political Economy of South Korean Long-Term Development NICOLAS GRINBERG School of Oriental and African Studies – Department of Economics, London, UK ABSTRACT This article analyses the process of economic development and associated political transformations in South Korea since the mid-1960s. It claims that, as in the rest of East Asia, capital accumulation in South Korea has revolved around the production of specific industrial goods for world markets using the relatively cheap and highly disciplined local workforce for simplified labour processes, as appendages of the machine or in manual assembly operations. This modality of accumulation resulted from changes in the forms of production of relative surplus value on a global scale through the development of computerisation and robotisation, and the concomi- tant transformation in the productive attributes of the collective worker of large-scale industry. The article identifies the main characteristics of the political and economic relations through which the structural transformation of the Korean society came about throughout the period studied, as a form of realising the global unity of the process of capitalist development. This analysis not only supports the claims made about the specific characteristics of the East Asian processes of capitalist devel- opment. It also shows the intrinsic unity of seemingly diverse political-economy processes, as forms of realisation of the transformations of Korean society. KEY WORDS: South Korea, long-term development, late industrialisation, political economy, economic miracle, economic crisis The South Korean experience of structural change and social transformation is, by all standards, impressive.