In lower-income economies, stocks exhibit less idiosyncratic volatility and business groups are more prevalent. This study connects these two findings by showing that business group affiliated firms' stock returns exhibit less idiosyncratic volatility than do the returns of otherwise similar...

This paper examines how investors perceive business group membership in Korea during the COVID-19 pandemic. Stock price performance analysis reveals evidence of a time-varying and heterogeneous value of affiliation: investors discount business group affiliation during a market collapse, but are...

This paper examines tax-induced income shifting behavior among the affiliated firms in the Korean business groups (chaebol). Korean corporate income tax law does not require consolidated tax returns, and business groups with a large number of affiliated member firms have incentives to shift...

This paper argues that groups reduce bankruptcy costs with respect not only to stand-alone units (thanks to coinsurance) but to conglomerates as well (thanks to corporate limited liability). This allows groups to save on contagion costs, thereby generating more value than conglomerates despite a...

Using a newly assembled 50 country firm-level database spanning 19 years, we document a “bright side” for employees of business group affiliated firms: less pronounced fluctuations in employment than unaffiliated firms in response to macroeconomic shocks. The results are robust to a variety...

This study investigates how dominant business groups affect investment decisions of other standalone firms in the economy. Using intra-group equity transactions within the top 40 largest business groups in Korea, this study finds that high levels of internal capital allocation within the groups...