IDEAS home Printed from https://ideas.repec.org/a/oup/rfinst/v21y2008i5p2015-2060.html
   My bibliography  Save this article

Intragroup Propping: Evidence from the Stock-Price Effects of Earnings Announcements by Korean Business Groups

Author

Listed:
  • Gil S. Bae
  • Youngsoon S. Cheon
  • Jun-Koo Kang

Abstract

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. The Author 2008. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org., Oxford University Press.

Suggested Citation

  • Gil S. Bae & Youngsoon S. Cheon & Jun-Koo Kang, 2008. "Intragroup Propping: Evidence from the Stock-Price Effects of Earnings Announcements by Korean Business Groups," The Review of Financial Studies, Society for Financial Studies, vol. 21(5), pages 2015-2060, September.
    • Handle: RePEc:oup:rfinst:v:21:y:2008:i:5:p:2015-2060
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/rfs/hhn055
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:rfinst:v:21:y:2008:i:5:p:2015-2060. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/sfsssea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.