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Seoul Journal of Economics - Vol. 15 , No. 2
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[ Article ]
Seoul Journal of Economics - Vol. 15, No. 2, pp. 245-276
Abbreviation: SJE
ISSN: 1225-0279 (Print)
Print publication date 31 May 2002
Received 29 Aug 2002 Revised 15 Jan 2003

Evaluating the Post-Crisis Corporate Restructuring in Korea
Ha-Joon Chang ; Jang-Sup Shin
Faculty of Economics and Politics University of Cambridge (hjc1001@econ.cam.ac.uk)
Assistant Professor, Department of Economics National Singapore University (ecssjs@nus.edu.sg)

JEL Classifications: G2, G3, K2, L4

Abstract

This paper assesses Korea's corporate reform programme implemented after the financial crisis in 1997. After critically reviewing the economic analyses that informed the corporate reform programme, we look at the key corporate reform measures, especially those related to the chaebols in some detail. We look at the reduction in debt-equity ratio, the ‘Big Deals,' the ‘Workout Programme,' and the measures that are intended to improve corporate governance, such as the changes in fair trading regulation, accounting standards, financial regulation, and the internal governance system. We argue that, while the post-crisis reform programme has introduced some positive elements, it has been implemented at substantial costs and furthermore reduced the long-run dynamism of the economy by negatively affecting the corporate financing system.

Keywords: Corporate governance, Corporate finance, Financial crisis
Acknowledgments

A revised version of the paper prepared for the Tenth Seoul Journal of Economics International Symposium on “The Socio-Economic Roles of Firms and Chaebols,” Seoul August 29, 2002. This paper draws heavily on Jang-Sup Shin & Ha-Joon Chang, Restructuring Korea Inc. - Financial Crisis, Corporate Reform, and Institutional Transition (London, Routledge Curzon: 2003). We thank Se-Jin Chang, our commentator at the Symposium, for his helpful comments on the first draft of the paper.

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