Tunneling or Value Added? Evidence from Mergers by Korean Business Groups

摘要: We examine whether firms belonging to Korean business groups ~chaebols! benefit from acquisitions they make or such provide a way for controlling shareholders increase their wealth by increasing the value of other group ~tunneling!. find that when chaebol-affiliated firm makes an acquisition, its stock price on average falls. While minority chaebolaffiliated making acquisition lose, shareholder benefits because enhances in group. This evidence is consistent with tunneling hypothesis. RECENT EMPIRICAL EVIDENCE SUGGESTS developing countries can facilitate efficient allocation capital and managerial resources. Khanna Palepu ~1997, 2000! argue mimic beneficial functions market mechanisms are present only advanced economies. When particular mechanism not well developed accessible, add providing member alternative means overcoming problems. For example, country’s external developed, operation internal within enables those best projects obtain 1 However, structure diversified may create agency In most groups, ownership highly concentrated,