The Effect of Holding Company on the Performance and Value of Its Affiliations: An Empirical Analysis (지주회사 전환이 자회사의 경영성과와 기업가치에 미치는 영향)

Kwak, Soo-hwan (곽수환); Choi Suk Bong (최석봉)

The Effect of Holding Company on the Performance and Value of Its Affiliations: An Empirical Analysis

Journal of Regulation Studies
2008, 17(2), pp.97-131
Publisher : 한국규제학회
Research Area : Social Science > Public Administration

Kwak, Soo-hwan ¹, Choi Suk Bong ²

¹신라대학교
²울산대학교

Accredited

ABSTRACT

This paper examines the usefulness of introduction and transformation of holding company by empirically investigating its effect on affiliated firms' performance and value. The holding company serves as a key venue to make firms' strategic decisions as well as a mechanism to reform corporate governance, especially in Korea after 1997 financial crisis. With unique longitudinal databases on 233 Korean holding company affiliations during 1997-2007, we compare the changes of firm performance and value at the holding company affiliations level to examine to what extent the holding company and its ownership structure contribute to affiliates' performance and value. Our empirical results suggest that the transformation of the holding company and its ownership play an important role in increasing affiliated firms' performance and value. The findings of this research have significant relevance to firms' strategy and financial policy, particularly in Korea which are in the process of seeking good corporate governance model as well as building indigenous capabilities for competing in global market.

KEYWORDS

Holding company, Corporate governance, Firm performance, Firm value

Citation status

* References for papers published after 2023 are currently being built.

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