Journal of the Korea Convergence Society (한국융합학회논문지)

Korea Convergence Society (한국융합학회)
권호 표지
DOI QR코드

DOI QR Code

The Effect of Wedge on Implied Cost of Equity

소유지배괴리도가 자기자본비용에 미치는 영향

  • Choi, Dong-Kwon (College of Business Administration, Chonnam National University) ;
  • Choi, Sungho (College of Business Administration, Chonnam National University)
  • 최동권 (전남대학교 경영학과) ;
  • 최성호 (전남대학교 경영대학 경영학부)
  • Received : 2019.07.19
  • Accepted : 2019.08.20
  • Published : 2019.08.28
Download PDF
⟨ Previous Next ⟩

Abstract

This study examines the effect of the wedge between voting rights and cash flow rights of controlling shareholders on the implied cost of equity. Prior studies posit that controlling shareholder's voting rights exceeding cash flow rights causes expropriating minority shareholders. Using date from 793 group-affiliated Korean firms for 10 years from 2005 to 2016, the result shows that there is a positive and significant relationship between controlling shareholders' wedge and implied cost of equity. This result implies that investors regard the controlling shareholders' wedge as potential agency cost in which they require additional risk premium because controlling shareholders have a strong incentive to pursue their private interests trough tunneling practices.

본 연구는 국내의 대규모기업집단 소속기업들을 대상으로 지배주주의 소유지배괴리도(Wedge)가 자기자본비용에 미치는 영향을 분석하였다. 기존의 선행연구에 의하면 지배주주가 소유지분을 초과하는 의결권을 가지게 되면 지배주주가 소액주주를 착취하는 대리인 문제가 발생할 수 있고, 따라서 소유지배괴리도는 위험요인으로 인식되어 투자자들은 이에 대한 추가적인 보상을 요구하게 되어 자기자본비용은 상승한다. 소유지배괴리도는 공정거래위원회의 직접지분기준방식을 사용하여 측정하였고, 자기자본비용은 Ohlson(1995) 모형을 확장한 잔여이익평가모형으로 추정된 값을 이용하였다. 분석결과 지배주주의 소유지배괴리도와 자기자본비용 사이에는 통계적으로 유의미한 정(+)의 상관관계가 있는 것으로 나타났다. 이 결과는 지배주주의 의결권이 소유지분을 더 많이 초과할수록 지배주주의가 사적이익을 추구할 유인이 증가하여 투자자는 더 높은 위험프리미엄을 요구한다는 의미로 해석할 수 있다.

Keywords

References

  1. Development and Measurement of Evaluation Indicators to Promote Market Reform. (2003). KDI.
  2. J. S. Baek, J. K. Kang & K. S. Park. (2004). Corporate Governance and Firm Value: Evidence from the Korean Financial Crisis. Journal of Financial Economics, 71, 265-313. DOI : 10.1016/S0304-405X(03)00167-3
  3. H. M. Choi & Y. G. Cho. (2011). Control-ownership Disparity and Firm Value: The Moderating Effect of Foreign Ownership. International Business Review, 15(3), 93-108. DOI : 10.21739/IBR.2011.09.15.3.93
  4. J. S. Baek, J. K. Kang & K. S. Park. (2004). Corporate Governance and Firm Value: Evidence from the Korean Financial Crisis. Journal of Financial Economics, 71(2), 265-313. DOI : 10.1016/S0304-405X(03)00167-3
  5. S. Claessens, S. Djankov, J. P. Fan & L. H. Lang. (2002). Disentangling the Incentive and Entrenchment Effects of Large Shareholdings. Journal of Finance, 57(6), 2741-2771. DOI : 10.1111/1540-6261.00511
  6. S. W. Joh. (2003). Corporate Governance and Firm Profitability: Evidence from Korea Before the Economic Crisis, Journal of Financial Economics, 68(2), 287-322. DOI : 10.1016/S0304-405X(03)00068-0
  7. J. I. Seo & G. H. Lee. (2014). A Study on the Effects of Ownership-Control Disparity on Board's Social Independence. Journal of Strategic Management, 17(2), 123-154. DOI : 10.17786/jsm.2014.17.2.006
  8. E. Fama & M. C. Jensen. (1983). Separation of Ownership and Control. Journal of Law and Economy, 26, 301-326. DOI : 10.2139/ssrn.94034
  9. M. C. Jensen & W. H. Meckling. (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3(4), 305-360. DOI : 10.1016/0304-405X(76)90026-X
  10. H. DeAngelo & E. M. Rice. (1983). Antitakeover Charter Amendments and Stockholder Wealth. Journal of Financial Economics, 11(1-4), 329-359. DOI : 10.1016/0304-405X(83)90016-8
  11. R. Morck, A. Shleifer & R. W. Vishny. (1988). Management Ownership and Market Valuation: An Empirical Analysis. Journal of Financial Economics, 20(2), 293-315. DOI : 10.1016/0304-405X(88)90048-7
  12. R. La Porta, F. Lopez-de-Silanes, A. Shleifer & R. Vishny. (2000). Investor Protection and Corporate Governance. Journal of Financial Economics, 58, 3-27. DOI : 10.2139/ssrn.183908
  13. M. Faccio & H. P. Lang. (2002). The Ultimate Ownership of Western European Corporations. Journal of Financial Economics, 65(3), 365-395. DOI : 10.1016/S0304-405X(02)00146-0
  14. R. La Porta, F. Lopez-De-Silanes & A. Shleifer. (1999). Corporate Ownership around the World. Journal of Finance, 54(2), 471-517. DOI : 10.1111/0022-1082.00115
  15. B. Villalonga & R. Amit. (2006). How Do Family Ownership, Control and Management Affect Firm Value? Journal of Financial Economics, 80(2), 385-417. DOI : 10.1016/j.jfineco.2004.12.005
  16. S. Claessens, S. Djankov & L. Lang. (2000). The Separation of Ownership and Control in East Asian Corporation. Journal of Financial Economics, 58, 81-112. DOI : 10.1016/S0304-405X(00)00067-2
  17. T. Mitton. (2002). A Cross-Firm Analysis of the Impact of Corporate Governance on the East Asian Financial Crisis. Journal of Financial Economics, 64(2), 215-241. DOI : 10.1016/s0304-405x(02)00076-4
  18. M. L. Lemmon & K. V. Lins. (2003). Ownership Structure, Corporate Governance and Firm Value: Evidence from the East Asian Financial Crisis. Journal of Finance, 53(4), 1445-1468. DOI : 10.1111/1540-6261.00573
  19. V. Atanasov, A. Boone & D. Haushalter. (2010). Is There Shareholder Expropriation in the United States? An Analysis of Publicly Traded Subsidiaries. Journal of Financial and Quantitative Analysis, 45(1), 1-26. DOI : 10.1017/S0022109010000025
  20. H. Demsetz & K. Lehn. (1985), The Structure of Corporate Ownership: Causes and Consequences. Journal of Political Economy, 93(6), 1155-1177. DOI : 10.1086/261354
  21. D. H. Kim, D. W. Kim & B. G. Kim. (2011). Ownership-Control Disparity and Dividend Policy in Korea: Perspectives of Agency Theory. The Korean Journal of Financial Engineering, 10(2), 99-124. DOI : 10.35527/kfedoi.2011.10.2.005
  22. H. M. Choi & Y. G. Cho. (2011). Control-ownership Disparity and R&D Investment. Journal of the Korea Academia-Industrial Cooperation Society, 12(12), 5558-5563. DOI : 10.5762/kais.2013.14.11.5434
  23. W. Kang, H. H. Shin & J. H. Chang. (2005). The Effect of a Disparity between Cashflow Right and Voting Right on Firm Value and Performance: the Case of Korean Large Business Groups. The Korean Journal of Finance Association, 18(2), 1-39. UCI : G704-000234.2005.18.2.005
  24. D. H. Kim, D. W. Kim & B. G. Kim. (2011). Ownership-control Disparity and Corporate Value in Korea: the Consequences of Owner-managed and Agent-Led Firm. The Korean Journal of Financial Engineering, 10(1), 67-97. DOI : 10.35527/kfedoi.2011.10.1.004
  25. H. A. Skaife, D. W. Collins & R. LaFond. (2004). Corporate Governance and the Cost of Equity Capital. Emory, University of Iowa. Working Paper. DOI : 10.2139/ssrn.639681
  26. K. C. W. Chen, Z. Chen & K. C. J. Wei. (2009). Legal Protection of Investors, Corporate Governance, and the Cost of Equity Capital, Journal of Corporate c15(3), 273-289. DOI : 10.1016/j.jcorpfin.2009.01.001
  27. N. Boubakri, O. Guedhami & D. Mishra. (2010). Family Control and the Implied Cost of Equity: Evidence Before and After the Asian Financial Crisis. Journal of International Business Studies, 41, 451-474. DOI : 10.1057/jibs.2009.77
  28. C. S. A. Cheng, D. Collins & H. H. Huang. (2006). Shareholder Rights, Financial Disclosure and the Cost of Equity Capital. Review of Quantitative Finance and Accounting, 27(175), 175-204. DOI : 10.1007/s11156-006-8795-2
  29. I. Love, C. P. Himmelberg & R. G. Hubbard. (2004). Investor Protection, Ownership, and the Cost of Capital. World Bank Policy Research Working Paper, (2834). DOI : 10.1596/1813-9450-2834
  30. H. M. Chun. (2014). Managerial Ownership and Implied Cost of Equity Capital - Evidence from Korea. Journal of Taxation and Accounting, 15(1), 9-29. UCI : G704-001563.2014.15.1.004
  31. H. Byun, L. Hwang & S. Kwak. (2008). The Implied Cost of Equity Capital and Corporate Governance Practices. Asia-Pacific Journal of Financial Studies, 37, 139-184.
  32. H. U. Jun, H. J. Lee & K. I. Lee. (2013). The Effect of Conversion to Holding Company on Estimated Cost of Equity. Accounting Information Review, 31(2), 107-140. UCI : G704-001013.2013.31.2.001
  33. J. Y. Moon & M. C. Kim. (2009). An Empirical Study on the Effects of Accounting Quality and Corporate Governance on the Cost of Equity Capital. Journal of Taxation and Accounting, 10(3), 33-72. UCI : G704-001563.2009.10.3.009
  34. H. Y. Ahn & S. Choi. (2015). The Effect of Accounting Information Quality on Cost of Equity. The Korean Journal of Finance Association, 28(1), 37-69. UCI : G704-000234.2015.28.1.002
  35. W. R. Gebhardt, C. M. C. Lee & B. Swaminathan. (2001). Toward on Implied Cost of Capital. Journal of Accounting Research, 39(1), 135-176. DOI : 10.1111/1475-679X.00007
  36. S. Y. Ahn, S. M. Cha, Y. W. Ko & Y. K. Yoo. (2008). Implied Cost of Equity Capital in Earnings-based Valuation Model: Evidence from Korea. Korean Journal of Financial Studies, 37(4), 599-626. DOI : 10.1080/00014788.2004.9729975
  37. J. Ohlson. (1995). Earnings Book Values and Dividends in Equity Valuation. Contemporary Accounting Research, 11, 661-687. DOI : 10.1111/j.1911-3846.1995.tb00461.x
  38. H. J. Kim & S. S. Yoon. (2010). The Impact of Controlling Shareholders' Wedge on Share Repurchases and Cash Dividends. Korean Management Review, 39(6), 1477-1503. UCI : G704-000126.2010.39.6.006
  39. Y. Na. & W. B. Lee. (2014). An Empirical Analysis on Association between Fair Disclosure and the Cost of Equity Capital. Korean Accounting Review, 39(1), 1-42. UCI : G704-000358.2014.39.1.004
  40. J. Francis, K. Schipper & L. Vincent. (2005). Earnings and Dividend Informativeness When Cash Flow Rights are Separated from Voting Rights. Journal of Accounting and Economics, 39, 329-360. DOI: 10.1016/j.jacceco.2005.01.001
  41. F. Modigliani & M. H. Miller. (1958). The Cost of Capital, Corporation Finance and the Theory of Investment. The American Economic Review, 48(3), 261-297. DOI : 10.2307/1809766
  42. W. Beaver, P. Kettler & M. Scholes. (1970). The Association between Market-determined and Accounting-determined Measures of Risk. Accounting Review, 45, 654-682. DOI : 10.2307/2490419
  43. R. La Porta. (1996). Expectations and the Cross-section of Stock Returns. Journal of Finance, 51(5), 1715-1742. DOI : 10.2307/2329535
  44. E. Fama & K. French. (1992), The Cross Section of Expected Stock Returns. Journal of Finance, 47, 427-465. DOI : 10.1111/j.1540-6261.1992.tb04398.x