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2006, Vol.15, No.2

  • 1.

    Compensation for Regulatory Takings: The Case of Paldang Drinking Water Protection District

    Sung-Bae Kim | 2006, 15(2) | pp.3~38 | number of Cited : 2
    Abstract PDF
    This study evaluates the validity of compensation scheme for regulation imposed on the Paldang Drinking Water Protection Districts and discusses some policy implications. Particularly, although several programs devised to support the residents of the districts are based on special laws, it is questionable whether such programs conforms to the spirits of constitutions. This study addresses this question. Upon the analysis, it is revealed that no compensation is due for regulations imposed on the areas such as the Drinking Water Protection Districts and the Waterside Districts. But conditional compensation is due for regulation imposed the Waste Discharge Limiting Areas. Compensation is due for regulations imposed on the Special Policy Districts. In addition, the size of compensation, which differ depending on the nature of districts, seems inappropriate because they are estimated based on the assumption that all regulations are subject to compensation.
  • 2.

    Evaluating KFTC's Decisions on Horizontal Mergers: An Event Study

    최충규 | 2006, 15(2) | pp.39~62 | number of Cited : 2
    Abstract PDF
    This paper evaluates Korea Fair Trade Commission's decisions on 13 horizontal merger cases, using stock market data. Our results suggest that the commission's decisions are consistent with the reaction of the stock market only in 3 three cases and that in five cases they are not. In the rest 5 cases, we find insignificant results. It is noteworthy that the five inconsistent merger cases were reviewed by the commission during the Korean economic crisis. This might indicate that sociopolitical factors other than competition or consumer welfare affected the commission's decisions.
  • 3.

    A Legal Review on the Circular Equity Investment Prohibition's Bill

    Sam Hyun Chun | 2006, 15(2) | pp.63~86 | number of Cited : 10
    Abstract PDF
    An incumbent Assemblyman “Soochan Chai” submitted a bill of the Fair Trade Law for prohibition of circular equity investment to the National Assembly to make a improvement of corporate governance and ownership structure on October 2004. The Korea Fair Trade Commission made also a plan to revise the Fair Trade Law for prohibition of cycle investment on October 23, 2006. The carriage of the revised version of the law bears so many problems not only in formality but also in contents. To make matters worse, it will be unconstitutional. Therefor, this article will review the legal theory on the bill of the Fair Trade Law for prohibition of cycle investment from “The Fair Trade Committee” and incumbent Assemblyman “Soochan Chai”. This kind of investment control is attributable, in part, to the companies themselves which have accumulated wealth through unfair manners such as improper relationship with politics, unclear corporate governance, labor abuse, unfair transactions, and tax evasion. However, if the very fundamental objective of enterprises of making profits is ignored, companies have no reason to concentrate on its management. It is high time to form environments where companies can work hard with no worries. Ultimately, the prohibition of cycle investment and restriction of cross-affiliate holdings cannot help contracting investment from enterprises, and enterprises with no investment are nothing but dead ones. Therefore, the prohibition of cycle investment is the major culprit of enhancing pains that people suffer from.
  • 4.

    The Nature of The Firm and Competition

    신석훈 | 2006, 15(2) | pp.87~120 | number of Cited : 4
    Abstract PDF
    Modern competition law rests upon a distinction between property-based “internal or unilateral” firm action and contractual-based “concerted or cooperative” firm action. And law treats the former conduct as presumptively lawful while subjecting the latter to exacting scrutiny through the lens of market power theories. This tendency is grounded that current competition law rests upon price theory's nature of the firm (black box) and the derivative model of workable competition. However, application of New Institutional Economics (NIE) undermines the distinction between internal conduct and contractual conduct. NIE concludes that “a firm”, capable of “unilateral” action disposing of its own property, is in fact “nexus of contracts” between various individuals that supply labor, capital, and other inputs to avoid the cost of transacting relying upon the market to conduct economic activity. After all, the nature of competition is contractual competition. This approach to the nature of the firm and competition also helped economists and legal scholars interpret other methods of contractual organization short of complete vertical integration.
  • 5.

    Characteristics and Implications of the Exon-Florio Amendment- a study on its application to the telecommunications sector

    Lie Han Young | 강하연 | 여혁종 | 2006, 15(2) | pp.121~150 | number of Cited : 12
    Abstract PDF
    This study analyzes the pubic interest test under the “Exon-Florio Amendment”, with the objective of evaluating the mechanisms of governing foreign capital. It is argued that the public interest test under this law has trade-restrictive attributes, as it is applied only against foreign investors. An in-depth case study of foreign M&A in the telecommunications sector was conducted as public interest tests under both Section 310 of the Telecommunications Act and the Exon-Florio Amendment are applied. This study makes the following conclusions. (i) The real effect of the public interest test lies in delaying the domestic market entry of foreign capital; requiring Network Security Agreements (NSA) only on foreigners may have both positive or negative effect on the national interest. (ii) As qualitative regulation, the public interest test may be used in place of quantitative regulations no longer permissible under WTO rules; however its implementation must be carefully considered since the concept of public interest and its review process may be viewed as barriers to trade. (iii) Thus, the concept of public interest, if clarified or stipulated explicitly into law, may compromise regulatory flexibility but can provide for greater institutional transparency and market incentive for foreign capital.
  • 6.

    Relationship between Firm Investment and Tobin's Q under the Asymmetric Regulations of Corporate Governance

    Lee Won Heum | 2006, 15(2) | pp.151~185 | number of Cited : 4
    Abstract PDF
    We develop a valuation model, based on the seminal papers of M&M(1961, 1963), to estimate the growth opportunities, the proxy variable of which will be called as “intrinsic Q”. Using the intrinsic Q, we are studying the relationship between firm investment and growth opportunities during the post-IMF period, when the government has exerted asymmetric regulations on corporate governance. The empirical results are as follows; first of all, the intrinsic Q shows a statistically significant and positive investment-growth opportunities sensitivity, which is stronger than quasi Tobin's Q, which is adopted as a proxy variable of growth opportunities in general. Second, the large and Korean conglomerate firms show a more statistically significant and positive investment-growth opportunities sensitivity than the smaller and non-conglomerate firms. In sum, the regulations on corporate governance would help firms with great growth opportunities to invest more.
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