Intragroup propping: Evidence from the stock-price effects of earnings announcements by Korean business groups

• 成果类型: Article
• 署名作者: Bae, Gil S.; Cheon, Youngsoon S.; Kang, Jun-Koo
• 署名单位: Nanyang Technological University; Korea University; Chung Ang University; Michigan State University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhn055
• 发表日期: 2008
• 页码: 2015
• 关键词: CORPORATE GOVERNANCE; OWNERSHIP; performance; MARKETS; FIRMS

摘要

Using earnings announcement events made by firms belonging to Korean chaebols, we examine propping within a chaebol. Consistent with the market's ex ante valuation of intragroup propping, we find that the announcement of increased (decreased) earnings by a chaebol-affiliated firm has a positive (negative) effect on the market value of other nonannouncing affiliates. The sensitivity of the change in the market value of nonannouncing affiliates to abnormal returns for the announcing firms is higher if the cash flow right of the announcing firm's controlling shareholder is higher. The sensitivity is also higher if the announcing firm is larger, performs well, and has a higher debt guarantee ratio.