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@article{ART002352614},
author={Chun, Hongmin},
title={Corporate Cash Holdings and the Effect of Chaebol Affiliated on the Implied Cost of Equity Capital: Evidence from Korea},
journal={Journal of Insurance and Finance},
issn={2384-3209},
year={2018},
volume={29},
number={2},
pages={73-102},
doi={10.23842/jif.2018.29.2.003}

TY - JOUR
AU - Chun, Hongmin
TI - Corporate Cash Holdings and the Effect of Chaebol Affiliated on the Implied Cost of Equity Capital: Evidence from Korea
JO - Journal of Insurance and Finance
PY - 2018
VL - 29
IS - 2
PB - Korea Insurance Research Institute
SP - 73
EP - 102
SN - 2384-3209
AB - This paper examines firms’ cash holdings and their effect on equity capital cost, distinguishing firms that belong to chaebol and non-chaebol groups. A chaebol is a South Korean form of business conglomerate. Chaebols are typically global multinationals owning numerous international enterprises, controlled by controlling shareholders with power over all operations. So this paper needs to examine whether firms’ cash holdings and their effect on the implied cost of equity capital, distinguishing firms that belong to chaebol or not. Empirical results suggest that higher cash holdings increase risk, which holds for chaebol group of firms. Thus, a poor corporate governance system for a chaebol-affiliated firm with high cash holdings could be a possible factor contributing to the risk premium. Finally, we conduct a 2SLS regression, and our empirical results are consistent for both the full and the chaebol samples, suggesting that our ordinary least squares results are valid. So in Korea, higher cash holdings represent risk premium closely related to overinvestment and agency problems between managers and shareholders. Key Words: Cash holdings, Implied cost of equity capital, Chaebol, Agency problem.
KW - Cash holdings;Implied cost of equity capital;Chaebol;Agency problem
DO - 10.23842/jif.2018.29.2.003
ER -

Chun, Hongmin. (2018). Corporate Cash Holdings and the Effect of Chaebol Affiliated on the Implied Cost of Equity Capital: Evidence from Korea. Journal of Insurance and Finance, 29(2), 73-102.

Chun, Hongmin. 2018, "Corporate Cash Holdings and the Effect of Chaebol Affiliated on the Implied Cost of Equity Capital: Evidence from Korea", Journal of Insurance and Finance, vol.29, no.2 pp.73-102. Available from: doi:10.23842/jif.2018.29.2.003

Chun, Hongmin "Corporate Cash Holdings and the Effect of Chaebol Affiliated on the Implied Cost of Equity Capital: Evidence from Korea" Journal of Insurance and Finance 29.2 pp.73-102 (2018) : 73.

Chun, Hongmin. Corporate Cash Holdings and the Effect of Chaebol Affiliated on the Implied Cost of Equity Capital: Evidence from Korea. 2018; 29(2), 73-102. Available from: doi:10.23842/jif.2018.29.2.003

Chun, Hongmin. "Corporate Cash Holdings and the Effect of Chaebol Affiliated on the Implied Cost of Equity Capital: Evidence from Korea" Journal of Insurance and Finance 29, no.2 (2018) : 73-102.doi: 10.23842/jif.2018.29.2.003

Chun, Hongmin. Corporate Cash Holdings and the Effect of Chaebol Affiliated on the Implied Cost of Equity Capital: Evidence from Korea. Journal of Insurance and Finance, 29(2), 73-102. doi: 10.23842/jif.2018.29.2.003

Chun, Hongmin. Corporate Cash Holdings and the Effect of Chaebol Affiliated on the Implied Cost of Equity Capital: Evidence from Korea. Journal of Insurance and Finance. 2018; 29(2) 73-102. doi: 10.23842/jif.2018.29.2.003

Chun, Hongmin. Corporate Cash Holdings and the Effect of Chaebol Affiliated on the Implied Cost of Equity Capital: Evidence from Korea. 2018; 29(2), 73-102. Available from: doi:10.23842/jif.2018.29.2.003

Chun, Hongmin. "Corporate Cash Holdings and the Effect of Chaebol Affiliated on the Implied Cost of Equity Capital: Evidence from Korea" Journal of Insurance and Finance 29, no.2 (2018) : 73-102.doi: 10.23842/jif.2018.29.2.003