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How does product market competition interact with internal corporate governance? : Evidence from the Korean economy

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  • How does product market competition interact with internal corporate governance?
  • Byun, Hee Sub; Lee, Ji Hye; Park, Kyung Suh
  • Korea University Business School


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Title How does product market competition interact with internal corporate governance?
Similar Titles
Sub Title

Evidence from the Korean economy

Material Type Reports
Author(English)

Byun, Hee Sub; Lee, Ji Hye; Park, Kyung Suh

Publisher

[Seoul]:Korea University Business School

Date 2011
Pages 47
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Original Format pdf
Subject Industry and Technology
Holding International Finance Corporation

Abstract

Existing literature regarding the relationship between product market competition and internal corporate governance ignores the possibility that firm characteristics may differentially affect the relationship. We conjecture and empirically test whether firms that belong to a business group behave differently from standalone firms in their decisions regarding internal corporate governance, given product market competition. We find that the member firms of business groups maintain better internal corporate governance in a noncompetitive environment, whereas stand-alone firms do so in a competitive environment. We also analyze the effects of the interaction between product market competition and internal corporate governance on firm value, and determine that only internal corporate governance has a positive effect on firm value regardless of product market competition for those firms that belong to a business group, whereas the positive effects of internal corporate governance on firm value are stronger in a non-competitive environment for stand-alone firms. (The rest omitted)