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

다국어 초록 (Multilingual Abstract)

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.

목차 (Table of Contents)

• ABSTRACT
• 1. Introduction
• 2. Centrality Metrics and Social Network Approach
• 2.1 Ownership Structure Measures of Business Groups
• 2.2 Social Network Approach and Other Centrality Measures
• 2.3. Hypothesis Development: Decisions to Go Public, Stay Private, and Divest
• 3. Data, Methodologies, and Summary Statistics
• 3.1. Data
• 3.2 Variable Descriptions: Centrality Measures, Position, and Firm Characteristics
• 3.3. Summary Statistics
• 3.4. Research Design
• 4. Empirical Results
• 4.1. Centrality and Going Public Decisions
• 4.2. Centrality and Decisions on Divesture
• 4.3. Multinomial Logit Analysis: Stay Private, Go Public, or Be Divested
• 5. Summary and Conclusions
• References