Corporate Governance and Firm Profitability: Evidence from Korea before the economic crisis

摘要: Abstract This study examines how ownership structure and conflicts of interest among shareholders under a poor corporate governance system affected firm performance before the crisis. Using 5,829 Korean firms subject to outside auditing during 1993–1997, paper finds that with low concentration show profitability, controlling for industry characteristics. Controlling expropriated resources even when their was small. Firms high disparity between control rights showed profitability. When business group transferred from subsidiary another, they were often wasted, suggesting “tunneling” occurred. In addition, negative effects control-ownership internal capital market inefficiency stronger in publicly traded than privately held ones.