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Infant firms in emerging market: An analysis of stand-alones vs. subsidiaries

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  • Kim, Soo Jin
  • Kim, Woojin
  • Yang, Dong Ryung

Abstract

Newly established manufacturing firms in Korea without any corporate shareholder participation — stand-alones — exhibit significantly higher profitability and smaller asset size compared to those set up by corporate shareholders — subsidiaries. This pattern holds even for stand-alones and subsidiaries set up by the same controlling shareholder. Such differences in profitability do not seem to be driven by inherent differences in business risk nor reflected in post-establishment survival rates. Moreover, infant firms' overall profitability depends more on internal transactions with affiliated firms than external transactions.

Suggested Citation

  • Kim, Soo Jin & Kim, Woojin & Yang, Dong Ryung, 2015. "Infant firms in emerging market: An analysis of stand-alones vs. subsidiaries," Emerging Markets Review, Elsevier, vol. 25(C), pages 30-52.
    • Handle: RePEc:eee:ememar:v:25:y:2015:i:c:p:30-52
    DOI: 10.1016/j.ememar.2015.04.003
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    Cited by:

    1. Chien-Nan Chen & Chengli Tien & Bernard Gan, 2019. "The postentry performance of business groups’ new venture affiliates," Australian Journal of Management, Australian School of Business, vol. 44(2), pages 325-343, May.

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    More about this item

    Keywords

    Stand-alone; Subsidiary; Pyramid; Business group; Related party transaction; Korea;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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