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Adjustment costs and investment efficiency of business groups in Korea

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  • Adjustment costs and investment efficiency of business groups in Korea
  • Kim, Taegi
  • Scientific Research Publishing


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Title Adjustment costs and investment efficiency of business groups in Korea
Similar Titles
Material Type Articles
Author(English)

Kim, Taegi

Publisher

[Wuhan]:Scientific Research Publishing

Date 2016-06
Journal Title; Vol./Issue Modern Economy:Vol. 17(No. 6)
Pages 7
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic Administration
Holding Scientific Research Publishing

Abstract

This paper investigates investment efficiency of business groups in Korea. Business groups can centralize knowledge and group resources, which reduces the cost of entering a new industry. In view of Tobin’s q, the adjustment costs of investment of business group firms are lower than those of independent firms. The empirical results show that the adjustment costs of business group firms are lower than those of independent firms, and that the output-capital ratio of business group firms is greater than that of independent firms. The results suggest that business group firms contribute to lowering the adjustment cost and to increasing investment, which, in turn, contribute to the growth of the Korean economy.