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Korean Journal of Financial Studies 2009;38(4):455-478.
Published online December 31, 2009.
Agency Costs of Self-Dealings in Korean Business Groups
Won Heum Lee
대기업집단 내부거래의 대리인가설 검정에 관한 연구
I examine the agency problems of self-dealings in the Korean business groups (hereafter referred to as "SD") by directly estimating the size of the agency costs of the firm. The hypothesis test of agency problems is based on the event study methodology of VESA. The SD samples of this study are collected from the mandatory disclosures for a period of nine years from 2000 to 2008. The empirical results are summarized as follows. First, it is observed that the SD samples do not support the tunneling hypothesis. Rather I can find evidences to support the propping hypothesis. Second, a majority of the SD can contribute to reducing the size of agency costs and then to increasing the intrinsic values of the companies. It can be said that the SD in the internal business market can contribute to increasing the intrinsic values of earnings, intangible assets and growth opportunities as well. Third, comparing with both the short-term and the long-term effects of the SD, I can conclude that the SD can reduce the agency costs in the short run, but will not increase the involved firm values in the long run.
Key Words: 대규모내부거래,대기업집단,대리인비용,배임가설,조장가설,Agency Costs,Business Groups,Propping Hypothesis,Self-Dealing,Tunneling Hypothesis
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