The effects of becoming holding companies on corporate governance and business concentration
지주회사체제가 기업지배구조의 효과성과 사업집중화에 미치는 영향

Ji Eui Yoon, Giseok Nam, Duk Ho Kim, Joongwha Kim
2014 Journal of Digital Convergence  
This study investigated the stock market reaction to the announcement of conversion to holding company and its influence on the market value and corporate governance before and after the event. Generally, it is known that the conversion to holding company strengthens corporate governance because of diversification effects. Accordingly, it is expected that holding companies have a significantly positive influence on the short and long term stock value and improve firm performance. The results
more » ... as follows. First, companies have significantly positive short-term abnormal returns for a day. It confirms the stock market reaction hypothesis. Second, it is found that corporate governance is improved in two ways, protection of stock holders' right and distribution of corporate income in the year after converting to holding companies. However, the degree of business concentration appears to be decreased but the result is statistically insignificant after the conversion. Third, there is no significant positive relation between market performance and both protection of stock holders' right and distribution of corporate income. Thus, the results do not adequately support the hypothesis between corporate transparency and market performance.
doi:10.14400/jdc.2014.12.10.121 fatcat:v7kpjuv2z5hlbkjmsw4rlarzri