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WHAT DETERMINANTS AFFECT THE CAPITAL STRUCTURE OF CONSUMER CO-OPERATIVES? THE CASE OF iCOOP KOREA

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  • Jinseon SEO
  • Woosuk CHOI

Abstract

he capital structure of co-operatives can differ from that of IOB (Investor-Owned Businesses) since the two organizations differ in their aims, governance structures and decision-making principles. This paper examines whether the determinants verified in IOB affect the leverage ratio of consumer co-operatives. Consumer co-operatives in South Korea have been rapidly growing during the last decade. There are two leading theories in finance that explain capital structure: the trade-off and pecking order theories. Focusing on consumer co-operatives in South Korea, the paper aims to analyze empirically what determinants have effect on the capital structure of consumer co-operatives and which of the two theories is more plausible. This study reveals that profitability and firm size have a significantly negative effect on leverage while tangibility and growth have a significantly positive effect on it. In conclusion, it seems that neither of the theories above perfectly accounts for the capital structure of consumer co-operatives because of the differences in governance characteristics between consumer co-operatives and IOB as well as in the costs of bankruptcy, agency, informational asymmetry and securities issuance.

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  • Jinseon SEO & Woosuk CHOI, 2016. "WHAT DETERMINANTS AFFECT THE CAPITAL STRUCTURE OF CONSUMER CO-OPERATIVES? THE CASE OF iCOOP KOREA," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 87(1), pages 117-135, December.
    • Handle: RePEc:bla:annpce:v:87:y:2016:i:1:p:117-135
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    Cited by:

    1. Jinseon Seo & Woosuk Choi, 2021. "Classification of co‐operative member shares as equity or liabilities: The case of consumer co‐operatives in South Korea," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 92(2), pages 283-305, June.
    2. Kasım Kiracı & Nurhan Aydin, 2018. "Factors that Determine the Capital Structure: An Empirical Study on Low-cost Airlines," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 65(3), pages 227-246, September.
    3. Eric Bidet & Hyungsik Eum, 2022. "Une analyse socio‐économique de la trajectoire institutionnelle de l'entreprise sociale : le cas de la Corée du Sud," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 93(1), pages 229-247, March.

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