Centrality and Corporate Governance Decisions of Korean chaebols : Social Network Approach

Jin Q Jeon,Cheolwoo Lee,Chan-Kyoo Park 한국재무학회 2019 한국재무학회 학술대회 Vol.2019 No.05

Almeida et al. (2011) show how Korean chaebols are structured using the critical control threshold centrality. In this paper, we introduce the social network theory to operationalize centrality in the context of the organizational structure of a business group. Specifically, the degree centrality, the Katz centrality and the Hub/Authority centrality are employed to show how chaebols make corporate governance decisions—going public, staying private, and being divested—in terms of centrality. We find that firms with high centrality are more likely to go public while firms with low centrality are more likely to stay private or be divested. Specifically, firms invested by other group firms tend to stay private and firms without substantial equity stake in other group firms tend to be divested. We calibrate centrality based on the social network theory and explore how Korean chaebol system evolves for survival and prosperity.

Heated Negotiation within the Syndicate and IPOs

Jin Q. Jeon,Jin S. Kim,Cheolwoo Lee 한국재무학회 2010 한국재무학회 학술대회 Vol.2010 No.05

This paper examines the determinants of heated negotiation within the syndicate––i) between the lead underwriter and co-managers and ii) among co-managers––and how heated negotiation affects IPOs. We find that heated negotiation is positively related to underwriter compensation for the lead underwriter, the number of co-managers, and gross spread in dollars and negatively to underwriter compensation for co-managers and co-managers’ average reputation, The presence of co-manager all-star analysts is important for heated negotiation between the lead underwriter and co-managers but not a factor for that among co-managers. Heated negotiation appears to increase the number of market makers in the aftermarket and such result is more pronounced when there is heated negotiation among co-managers.

DO MARKETING ACTIVITIES ENHANCE FIRM VALUE? EVIDENCE FROM M&A TRANSACTIONS

Jin Q Jeon,Juyoun Ryoo,Cheolwoo Lee 한국재무학회 2015 한국재무학회 학술대회 Vol.2015 No.11

In this paper, we use an event study approach and find that aggressive marketing activities of target firms prior to the M&A deal are not always compensated with greater premiums and favorable market reactions, which would represent the presence of a potential “window-dressing.” Further analysis shows that the positive association between marketing activities and deal performance is conditional on the change in institutional ownership prior to the deal, suggesting that institutional investors cherry-pick good targets with value-enhancing marketing activities. The results hold for both OLS and 2SLS after accounting for potential endogeneity. This paper contributes to the marketing-finance interface literature by providing more precise and direct evidence on how marketing strategies affect firm value.

Post Signing Market Check or Window Dressing? The Role of Go-Shop Provisions in M&A Transactions

Jin Q Jeon 한국재무학회 2011 한국재무학회 학술대회 Vol.2011 No.05

The paper examines the use of go-shop provisions in merger agreements. Using the sample of 1,254 M&A deals involving U.S targets between 2004 and 2008, we find that 95 deals include go-shop provisions. The empirical results show that go-shop deals tend to have higher deal premiums and receive more competing bids. The length of go-shops, however, does not affect deal premiums and competition. Deals are less likely to be consummated when go-shop provisions are included and when the length of go-shops is longer. However, go-shops have no effect on the consummation of high premium deals. Overall, our findings generally support the proposition that go-shops reflect target managers’ efforts to fulfill the Revlon duties, consistent with Subramanian (2008).

Heated Negotiation within the Syndicate and IPOs

Jin Q. Jeon,Jin S. Kim,Cheolwoo Lee 한국산업경영학회 2010 한국산업경영학회 발표논문집 Vol.2010 No.2

This paper examines the determinants of heated negotiation within the syndicate––i) between the lead underwriter and co-managers and ii) among co-managers––and how heated negotiation affects IPOs. We find that heated negotiation is positively related to underwriter compensation for the lead underwriter, the number of co-managers, and gross spread in dollars and negatively to underwriter compensation for co-managers and co-managers’ average reputation, The presence of co-manager all-star analysts is important for heated negotiation between the lead underwriter and co-managers but not a factor for that among co-managers. Heated negotiation appears to increase the number of market makers in the aftermarket and such result is more pronounced when there is heated negotiation among co-managers.

Heated Negotiation within the Syndicate and IPOs

Jin Q Jeon,Jin S. Kim,Cheolwoo Lee 한국재무학회 2011 한국재무학회 학술대회 Vol.2011 No.09

This paper examines the determinants of the heated negotiation within the syndicate––i) between the lead underwriter and co-managers and ii) among co-managers––and how it affects IPOs. We find that the heated negotiation is associated with less compensation for co-managers. Our results overall suggest that the inferior co-managers’ bargaining position and superior lead underwriter bargaining power, together increasing a chance of an unfair initial profit sharing, lead to the heated negotiation. The heated negotiation between the lead underwriter and comanagers appears to increase the number of co-manager recommendations, and these recommendations increase when they are better compensated and the IPO size is large. We also consider other key underwriter services such information production, market making, and all-star analyst coverage. However, we find no significant results and these services are commonly not positively related to co-manager compensation, suggesting that the provision of key underwriter services is tightly linked to their corresponding compensation.

Centrality and Corporate Governance Decisions of Korean Chaebols : A Social Network Approach

Jin Q Jeon,Cheolwoo Lee,Chan-Kyoo Park 한국재무학회 2019 한국재무학회 학술대회 Vol.2019 No.11

Almeida et al. (2011) show how Korean chaebols are structured using the critical control threshold centrality. In this paper, we introduce the social network theory to operationalize centrality in the context of the organizational structure of a business group. Specifically, the degree centrality, the Katz centrality, and the Hub/Authority centrality are employed to explain how chaebols make corporate governance decisions—going public, staying private, and being divested—in terms of centrality. We find that firms with high centrality are more likely to go public while firms with low centrality are more likely to stay private or be divested. In addition, firms invested by other group firms tend to stay private and firms without substantial equity stake in other group firms tend to be divested. Firms directly owned by the controlling family are more likely to stay private and less likely to be divested. We calibrate centrality based on the social network theory and explore how Korean chaebol system evolves for survival and prosperity.

ESG Factors as a Determinant on Credit Ratings

Jin Q Jeon 한국재무학회 2021 財務硏究 Vol.34 No.2

공매도가 내부자 매도에 미치는 영향에 관한 실증연구

전진규 ( Jin Q Jeon ),조형준 ( Hyung Joon Cho ) 명지대학교 금융지식연구소 2018 금융지식연구 Vol.16 No.2

본 연구에서는 공매도가 기업내부자의 지분매도에 영향을 미치는지에 대하여 분석하였다. 내부자가 부정적 기업정보를 가지고 있을 경우 공매도의 증가는 부정적 정보의 전파와 수익률의 추가하락을 우려하는 내부자의 지분매도 행위를 가속화시킬 수 있다 (Massa, Qian, Xu, and Zhang, 2015). 내부자의 범위를 최대주주 및 5% 이상 대주주, 그리고 5%로 미만을 소유하고 있는 임원으로 한정하고, 위의 가설을 검증한 결과 전체기업 표본에서 공매도율이 높아질수록 최대주주, 10%이상, 5-10%를 소유한 주주의 지분율이 유의하게 감소하는 것으로 나타났다. 시장별 분석에서 상대적으로 기업연혁이 길고 안정적인 KOSPI 시장 기업들의 주주들이 덜 민감하게 반응하는 것으로 나타났다. 본 연구는 국내 시장을 대상으로 공매도와 내부자 매도의 행태를 최초로 분석하였다는데 의의가 있다. 다만 국내 데이터베이스에서 획득 가능한 1년 평균 공매도율 및 지분율을 사용함으로서 두변수 간 시계열적 특성 등 보다 세밀한 분석을 수행하지 못한 점은 연구의 한계점이며 이에 따라 결과의 해석에도 주의가 필요하다. In this study, we investigate the effect of short selling on equity sales by corporate insiders. If insiders have negative information on the future of firms, an increase in short sales may accelerate sell-offs by insiders who are concerned with the spread of negative information as well as a further decline in their stock prices. We define the corporate insiders by 4 categories: Largest shareholders, shareholders holding more than 10%, shareholders holding 5 to 10% and executives holding less than 5%. The results of the whole sample analysis show that short sales significantly reduce the ownership of largest shareholders and shareholders with more than 10% as well as with 5 to 10%. We also find that insiders of KOSPI listed firms are less sensitive to those of KOSDAQ firms, which suggests that KOSPI firms are older and more stable. This paper contributes to literature in that it is the first study to examine short selling and behaviors of corporate insiders in the Korean market. However, since we use the 1-year average short selling ratio and ownership data currently available in the domestic database, it is not possible to perform more detailed analysis on time-series characteristics of those two variables.

경쟁기업에 대한 애널리스트 투자정보가 신규 상장기업에 미치는 영향

전진규(Jin Q Jeon) 한국증권학회 2021 한국증권학회지 Vol.50 No.5

본 연구에서는 업종 내 기존 상장기업에 대한 애널리스트 투자정보가 신규 상장기업의 저가발행에 미치는 영향을 2006년부터 2019년 까지 총 740건의 IPOs를 대상으로 분석하였다. 먼저 특정 업종내 기존 상장기업에 대한 투자의견 상향 비율이 높을수록 IPO 저가발행률이 유의적으로 낮게 나타났는데, 이는 업종에 대한 높은 호감이 신규 상장기업의 공모가에도 긍정적 영향을 미친다는 전염효과 가설을 지지하는 결과이다. 반면, 기존 상장기업에 대한 이익예측치의 상향 비율이 높을수록 저가평가율이 높게 나타났는데, 이는 경쟁기업들의 이익 성장이 신규 상장기업의 업종 내 미래 경쟁력에 부정적인 영향을 미친다는 경쟁효과 가설을 지지한다. 이와 같은 효과는 IPO 기업과 경쟁기업들의 업종 내 경쟁적지위에 따라 다르게 나타났다. 업종 경쟁도를 고려하여 분석한 결과, 집중도가 높은 업종에서 기존 상장기업에 대한 투자의견 상향 정보는 전염효과가 높아 IPO 저가발행을 감소시키는 것으로 나타났다. 기존 연구들이 애널리스트 투자정보와 해당 기업의 투자성과를 분석했던 것과 달리, 본고에서는 IPO 시장을 대상으로 경쟁기업에 대한 애널리스트 투자정보의 확산효과를 최초로 분석하였다는데 의의가 있다. This study investigates the effect of analysts’ recommendations and earnings forecasts for newly listed firms in the same industry. IPO underpricing is significantly lower as the number of firms whose investment recommendations are upgraded increases, supporting the contagion effect hypothesis that a high affinity for the industry has a positive effect on the IPO offer price. However, as the number of listed firms with higher earnings forecasts increases, IPO underpricing is higher, which supports the competitive effect hypothesis that the profit growth of competitors negatively affects IPO firms’ competitiveness. The effects vary depending on the competitive positions of both listed firms and IPO firms within the industry. The results also show that in industries with high concentration (i.e. low competition) , analyst information on listed firms has a greater contagion effect, while the competition effect hypothesis that better earnings forecasts for rival firms negatively affect IPO firms’ competitive position is not supported. This study contributes to the literature by analyzing the information spillover effect of analyst coverage in the IPO market by showing that the effects vary depending on the firms’ competitive positions as well as industry competition.