Corporate Ownership and Control journal / Forthcoming paper Determinants of the corporate governance of Korean firms

This paper investigates the determinants of the corporate governance of the firms listed on the Korea Exchange. We find that controlling shareholders has a negative effect on the corporate governance of their firms, while institutional or foreign shareholders exercise positive roles even though their effect is limited. The empirical results imply that internal corporate governance mechanism as a monitoring tool may not work due to resisting controlling shareholders, and that the exploitation of minority shareholders by controlling shareholders may persist. It suggests the need for regulatory intervention in setting corporate governance, and also for an active market for control to complement malfunctioning internal governance mechanism