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Identifier to cite or link to this item: https://hdl.handle.net/10086/13930

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Title
Business Groups and Tunneling: Evidence from Private Securities Offerings by Korean Chaebols
Creator
Creator Name
Baek, Jae-Seung Baek, Jae-Seung
Affiliation
Affiliation Name
Hankuk University of Foreign Studies
Creator Name
Kang, Jun-Koo Kang, Jun-Koo
Affiliation
Affiliation Name
Michigan State University
Creator Name
Lee, Inmoo Lee, Inmoo
Affiliation
Affiliation Name
Korea University
Editor
Contributor Name
Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University
Abstract
Using a comprehensive sample of equity-linked private securities offerings by Korean firms from 1989 to 2000, we examine whether such offerings can be used as a mechanism for wealth transfer between issuers and acquirers. For deals involving issuers and acquirers in the same business group (chaebol), the announcement returns for chaebol-affiliated issuers with good past performance are lower than those for other types of issuers if the price discount is larger. In contrast, this deal leads to more value creation for chaebol-affiliated acquirers than other types of acquirers. Furthermore, well-performing chaebol-affiliated acquirers experience a larger wealth loss than other types of acquirers if they buy securities from poorly performing issuers in the same chaebol. We also find that chaebol firms with good past performance tend to sell private securities at a low price to their member firms. This evidence is consistent with tunneling within business groups.
Description
This version: January 2004
Publisher
Institute of Economic Research, Hitotsubashi University
Issued Date
2004-03
Language
English(eng)
Resource Type
technical report
Version Type
VoR
Is Part OfRelation -
Related Title
CEI Working Paper Series ; No. 2004-6
Relation
Related Identifier
URI
  http://cei.ier.hit-u.ac.jp/index.html
NCID
AA11590659
Number of Pages
45
Appears in Collections
CEI Working Paper Series
URL
https://hdl.handle.net/10086/13930