Intragroup propping: Evidence from the stock-price effects of earnings announcements by Korean business groups
- Authors
- Bae, Gil S.; Cheon, Youngsoon S.; Kang, Jun-Koo
- Issue Date
- 9월-2008
- Publisher
- OXFORD UNIV PRESS INC
- Citation
- REVIEW OF FINANCIAL STUDIES, v.21, no.5, pp.2015 - 2060
- Indexed
- SCIE
SCOPUS
- Journal Title
- REVIEW OF FINANCIAL STUDIES
- Volume
- 21
- Number
- 5
- Start Page
- 2015
- End Page
- 2060
- URI
- https://scholar.korea.ac.kr/handle/2021.sw.korea/122825
- DOI
- 10.1093/rfs/hhn055
- ISSN
- 0893-9454
- Abstract
- Using earnings announcement events made by firms belonging to Korean chaebols, we examine propping within a chaebol. Consistent with the market's ex ante valuation of intragroup propping, we find that the announcement of increased (decreased) earnings by a chaebol-affiliated firm has a positive (negative) effect on the market value of other nonannouncing affiliates. The sensitivity of the change in the market value of nonannouncing affiliates to abnormal returns for the announcing firms is higher if the cash flow right of the announcing firm's controlling shareholder is higher. The sensitivity is also higher if the announcing firm is larger, performs well, and has a higher debt guarantee ratio.
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Collections - Korea University Business School > Department of Business Administration > 1. Journal Articles
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