소장기록
제목The Korean Corporate Sector : Crisis and Reform
설명Since government intervention and poor corporate governance contributed significantly to the 1997 Korean economic crisis, reducing government intervention and improving corporate governance are the keys to preventing another such crisis. Past Korean governments directly and indirectly controlled banks and gave low-interest loans to preferred large firms in the heavy industry throughout the 1970s and 1980s. When these firms could not repay their debts, the government froze their debts and provided bailout loans in 1972 and 1979-1988. Given government incentives and guarantees, firms borrowed heavily and expanded beyond profit maximization levels, resulting in high debt-equity levels. Poor corporate governance also contributed to the 1997 crisis in the form of (a) inaccurate company financial information, (b) no credible exit threat, (c) insufficient financial institution monitoring, and (d) few legal rights and forms of protection for minority shareholders. Accurate financial information was not widely available because of an inadequate accounting system, lack of transparency, and firm incentives to exaggerate their size. Second, the absence of a credible exit threat stemmed from government bans on hostile mergers and acquisitions, required government approval of foreign M&As, and government bailouts of failing companies. Third, repeated government intervention impeded independent decision-making by banks and reduced the utility of financial institution monitoring. Finally, minority shareholders had few legal rights and protections. The separate majority voting system for each director, lack of accurate information, and dispersed ownership structure ensured that the board of directors remained in control of the controlling shareholders (who often owned less than 20% of the shares) and unaccountable to minority shareholders. As a result of poor corporate governance, controlling shareholders could pursue private gains at the expense of the other shareholders, resulting in lower average returns on equity than the prevailing interest rates for loans.
생산자조성욱
날짜1999-11-01
기록유형문서류
기록형태보고서/논문
주제정치경제
연관링크http://www.kdi.re.kr/research/subjects_view.jsp?pub_no=982
식별번호KC-R-00508
제목The Korean Corporate Sector : Crisis and Reform
설명Since government intervention and poor corporate governance contributed significantly to the 1997 Korean economic crisis, reducing government intervention and improving corporate governance are the keys to preventing another such crisis. Past Korean governments directly and indirectly controlled banks and gave low-interest loans to preferred large firms in the heavy industry throughout the 1970s and 1980s. When these firms could not repay their debts, the government froze their debts and provided bailout loans in 1972 and 1979-1988. Given government incentives and guarantees, firms borrowed heavily and expanded beyond profit maximization levels, resulting in high debt-equity levels. Poor corporate governance also contributed to the 1997 crisis in the form of (a) inaccurate company financial information, (b) no credible exit threat, (c) insufficient financial institution monitoring, and (d) few legal rights and forms of protection for minority shareholders. Accurate financial information was not widely available because of an inadequate accounting system, lack of transparency, and firm incentives to exaggerate their size. Second, the absence of a credible exit threat stemmed from government bans on hostile mergers and acquisitions, required government approval of foreign M&As, and government bailouts of failing companies. Third, repeated government intervention impeded independent decision-making by banks and reduced the utility of financial institution monitoring. Finally, minority shareholders had few legal rights and protections. The separate majority voting system for each director, lack of accurate information, and dispersed ownership structure ensured that the board of directors remained in control of the controlling shareholders (who often owned less than 20% of the shares) and unaccountable to minority shareholders. As a result of poor corporate governance, controlling shareholders could pursue private gains at the expense of the other shareholders, resulting in lower average returns on equity than the prevailing interest rates for loans.
생산자조성욱
날짜1999-11-01
크기 및 분량35쪽
언어영어
출처한국개발연구원
연관링크http://www.kdi.re.kr/research/subjects_view.jsp?pub_no=982
기록유형문서류
기록형태보고서/논문
대주제정치경제
소주제산업
자원유형기록
파일 b3c510d28d14d27b9898afe031d964d6.pdf
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