Transformation of Mid-Sized Firms into the Holding Company Structure

Park, Jinwoo; Lee, Min-Gyo

doi:2019.48.1.1

Korean J Financ Stud > Volume 48(1); 2019 > Article

Korean Journal of Financial Studies 2019;48(1):1-27.
DOI: https://doi.org/10.26845/KJFS.2019.02.48.1.1 Published online February 28, 2019.

Transformation of Mid-Sized Firms into the Holding Company Structure

Jinwoo Park, Min-Gyo Lee

중견기업의 인적분할을 통한 지주회사 전환

박진우, 이민교

한국외국어대학교

Abstract

This paper investigates the transformation of mid-sized firms into the holding company structure as observed in the Korean stock market during the period from 2007 to 2017. The results shows that the spin-offs into the holding company and the operating company by mid-sized firms with a simple business structure do not increase the firm value. Instead, the transformation into the holding company structure is exploited to strengthen major shareholders’ control. In particular, in the process of the share exchange between the holding company and the operating company, the stock price of the holding company drops greatly relative to the stock price of the operating company, which works to major shareholders’ advantage. In this process individual investors suffer losses as net buyers of the holding company stocks.

Key Words: 인적분할,지주회사,사업회사,재상장,대주주,Spin-Off,Holding Company,Operating Company,Relisting,Major Shareholders