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The positive impact of corporate governance on foreign equity ownership: Evidence from Korea

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  • The positive impact of corporate governance on foreign equity ownership: Evidence from Korea
  • Bowman, Robert G.; Min, Byung
  • La Trobe University


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Title The positive impact of corporate governance on foreign equity ownership: Evidence from Korea
Similar Titles
Material Type Reports
Author(English)

Bowman, Robert G.; Min, Byung

Publisher

[Melbourne, Australia]:La Trobe University

Date 2012-03
Pages 49
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic System
Government and Law < Governance
Holding SSRN

Abstract

We investigate whether the newly introduced outside director system affected firm ownership structure in South Korea, where the governance system changed significantly after the 1997 financial crisis. Using a unique dataset, we conduct panel data analyses for publicly traded Korean non-financial corporations. Results indicate that foreign investors place considerable value on the appointment of independent directors. An increase in foreign ownership, associated with an improvement in the corporate governance system, occurred after controlling home bias and firm size. Further, the positive effect of an outside director system on foreign ownership was greater for independent firms than it was for conglomerates (chaebols) and their affiliates. However, the expected decline in investment by banks with the change in governance to the outsider model was not supported.

User Note

2012 Financial Markets & Corporate Governance Conference