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The Change in Corporate Transparency of Korean Firms After the Asian Financial Crisis: an analysis using analysts' forecast data

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  • Jinho Chang
  • Young Jun Cho
  • Hyun‐Han Shin

Abstract

Using analysts' forecast error and forecast dispersion of firms covered by the I/B/E/S database, this study examines the change in information asymmetry of Korean firms around the financial crisis of 1997. Results show that the information asymmetry of Korean firms is lower after the financial crisis than before, implying that corporate transparency did, in effect, improve with the change in business environment. In addition, this study finds that chaebol firms have higher information asymmetry than non‐chaebol firm, and also that the corporate transparency improvement of chaebol firms is not higher than that of non‐chaebol firms in the post‐crisis period despite the reforms particularly targeted to chaebol firms after the financial crisis.

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  • Jinho Chang & Young Jun Cho & Hyun‐Han Shin, 2007. "The Change in Corporate Transparency of Korean Firms After the Asian Financial Crisis: an analysis using analysts' forecast data," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(6), pages 1144-1167, November.
    • Handle: RePEc:bla:corgov:v:15:y:2007:i:6:p:1144-1167
    DOI: 10.1111/j.1467-8683.2007.00637.x
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    2. Oh, Hyunjin & Chung, Chune Young & Fard, Amirhossein, 2023. "Tacit vigilance in an emerging economy: An institution-based perspective of passive blockholder monitoring," Research in International Business and Finance, Elsevier, vol. 64(C).
    3. Khalil Jebran & Shihua Chen, 2023. "Can we learn lessons from the past? COVID‐19 crisis and corporate governance responses," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 421-429, January.
    4. Jaimin Goh & Wonwook Choi & Jungeun Cho, 2016. "Changes in chaebol firms’ overinvestment after the Asian financial crisis: a long-term perspective," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 23(1), pages 75-111, March.
    5. Saehwa Hong & Hyung-Deok Shin, 2021. "Organizational slack and innovativeness: the moderating role of institutional transition in the Asian financial crisis," Asian Business & Management, Palgrave Macmillan, vol. 20(3), pages 370-389, July.
    6. John Nowland, 2008. "The Effect of National Governance Codes on Firm Disclosure Practices: Evidence from Analyst Earnings Forecasts," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(6), pages 475-491, November.
    7. Trigilia, Giulio, 2016. "Optimal Leverage and Strategic Disclosure," CRETA Online Discussion Paper Series 18, Centre for Research in Economic Theory and its Applications CRETA.
    8. Manseek Choi & Soonwook Hong, 2022. "Another Form of Greenwashing: The Effects of Chaebol Firms’ Corporate Governance Performance on the Donations," Sustainability, MDPI, vol. 14(6), pages 1-12, March.
    9. Choi, Young Rok & Yoshikawa, Toru & Zahra, Shaker A. & Han, Bong H., 2014. "Market-oriented institutional change and R&D investments: Do business groups enhance advantage?," Journal of World Business, Elsevier, vol. 49(4), pages 466-475.
    10. Chung, Chune Young & Kim, Hyeik & Wang, Kainan, 2022. "Do domestic or foreign institutional investors matter? The case of firm information asymmetry in Korea," Pacific-Basin Finance Journal, Elsevier, vol. 72(C).
    11. Trigilia, Giulio, 2016. "Optimal Leverage and Strategic Disclosure," Economic Research Papers 269584, University of Warwick - Department of Economics.
    12. Hossain, Md Miran & Mammadov, Babak & Vakilzadeh, Hamid, 2024. "Friends in media: Implications of media connections for analyst forecast optimism," International Review of Financial Analysis, Elsevier, vol. 93(C).
    13. ., 2010. "Recent Evolution of the Business Sector: Chaebols and SMEs," Chapters, in: The Korean Economy in Transition, chapter 8, Edward Elgar Publishing.
    14. Abiot Tessema & Moo Sung Kim & Jagadish Dandu, 2018. "The impact of ownership structure on earnings quality: the case of South Korea," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 15(3), pages 129-141, August.
    15. Trigilia, Giulio, 2016. "Optimal Leverage and Strategic Disclosure," The Warwick Economics Research Paper Series (TWERPS) 1111, University of Warwick, Department of Economics.
    16. Hani El-Chaarani & Rebecca Abraham & Yahya Skaf, 2022. "The Impact of Corporate Governance on the Financial Performance of the Banking Sector in the MENA (Middle Eastern and North African) Region: An Immunity Test of Banks for COVID-19," JRFM, MDPI, vol. 15(2), pages 1-21, February.
    17. Chinmay Pattnaik & James Chang & Hyun Shin, 2013. "Business groups and corporate transparency in emerging markets: Empirical evidence from India," Asia Pacific Journal of Management, Springer, vol. 30(4), pages 987-1004, December.

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