When heirs become major shareholders: Evidence on pyramiding financed by related-party sales
- Authors
- Hwang, Sunwoo; Kim, Woochan
- Issue Date
- 12월-2016
- Publisher
- ELSEVIER SCIENCE BV
- Keywords
- Family firm; Business group; Chaebol; Succession; Related-party transaction; Control-enhancement
- Citation
- JOURNAL OF CORPORATE FINANCE, v.41, pp.23 - 42
- Indexed
- SSCI
SCOPUS
- Journal Title
- JOURNAL OF CORPORATE FINANCE
- Volume
- 41
- Start Page
- 23
- End Page
- 42
- URI
- https://scholar.korea.ac.kr/handle/2021.sw.korea/86755
- DOI
- 10.1016/j.jcorpfin.2016.08.013
- ISSN
- 0929-1199
- Abstract
- This study investigates how related-party sales are used as a means to financially support the firms in which heirs become major shareholders and allow them to strengthen control over other firms in the group through pyramiding. From a universe of Korean chaebol firms during 2000-2011, we identify a subset of firms where heirs become major shareholders (treatment group) and compare them against their propensity-score-matched firms (control group) before and after the ownership change. A series of difference-in-differences tests with firm fixed effects reveal that treatment group firms experience greater related-party sales, benefit from them in terms of earnings, and gain importance in controlling other firms in the group. However, we do not find these results when non-heirs (e.g., controlling shareholders and other relatives) become major shareholders. (C) 2016 Published by Elsevier B.V.
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Collections - Korea University Business School > Department of Business Administration > 1. Journal Articles
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