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Corporate diversification and performance : Evidence from Korea

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  • Corporate diversification and performance
  • Lee, Soon Cheul
  • University of Oklahoma


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Title Corporate diversification and performance
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Sub Title

Evidence from Korea

Material Type Reports
Author(English)

Lee, Soon Cheul

Publisher

Norman:University of Oklahoma

Date 2002-02
Pages 103
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic Administration
Industry and Technology < Others
Holding University of Oklahoma

Abstract

This dissertation examines a sample of firms from the 70 largest Korean conglomerates, or chaebols, in order to determine the motivation behind their diversification strategies and to identify the effects of diversification on economic performance. The first essay, "Government Revenue Maximization, External Capital and Corporate Diversification,” examines the argument that firms that have easy access to external capital, which is directly related to government subsidies in Korea, become over-diversified. The empirical analysis shows that firms with a high debt level are the most likely to pursue diversified expansion. Furthermore, this study shows that these firms have a tendency to decrease their diversification level when the government reduces business subsidies. The analysis conducted here is consistent with the argument that extensive and skewed subsidies lead industrial firms to accumulate considerable resources that are a springboard for excessive diversification. (The rest omitted)