Tunneling by Related‐party Transactions: Evidence from Korean Conglomerates | Zendy

Cho Sungbin | Zendy; Lim KyungMook | Zendy

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Tunneling by Related‐party Transactions: Evidence from Korean Conglomerates

Author(s) -

Cho Sungbin,

Lim KyungMook

Publication year - 2018

Publication title -

asian economic journal

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.345

H-Index - 28

eISSN - 1467-8381

pISSN - 1351-3958

DOI - 10.1111/asej.12146

Subject(s) - shareholder , cash flow , monetary economics , business , relation (database) , transfer (computing) , free cash flow , affect (linguistics) , cash , economics , accounting , finance , corporate governance , database , computer science , linguistics , philosophy , parallel computing

This study analyzes tunneling created by related‐party transactions (RPT) in relation to controlling shareholders' cash‐flow rights. Results of the analysis confirm a statistically significant relation between cash‐flow rights and the earning rates of major controlling shareholders, indicating a transfer of wealth through RPT among affiliates of business groups. Furthermore, it is found that more sales made through RPT out of the total sales result in a higher earning rate, which implies that RPT affect the differences in earning rates among affiliates.

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