Business Group Heterogeneity and Firm Outcomes : Evidence from Korean Chaebols

This paper examines the impact of business group affiliation on the performance and corporate policies of Korean listed firms over the period 2007–2019. This study proposes a novel approach to observe heterogeneity in the affiliation effects. Overall, we conclude that business group characteristics are reflected in firm outcomes. We find that investors perceive group membership positively as they pay a premium to hold affiliated firms. The premium is related to profitability and size of business groups, which is consistent with resource-based theories. This analysis also identifies significant group-specific effects on firm policies. These findings suggest that several business groups follow group-level strategies and apply homogeneous financial and investment policies to all their affiliates