한국 그룹기업의 내부자본시장과 정보효율성 = The Internal Capital Markets of Large Business Groups and Their Informational Efficiency in Korea

다국어 초록 (Multilingual Abstract)

One of the specific features of the large business groups of Korea is that financial activities such as inter-firm guarantees and inter-firm credits are intensively performed in the (quasi) internal capital market which is made up by holding shares among companies of large business groups. There are two conflicting views about the internal capital market. Some economists see it as an inefficient and illegitimate system which enables that huge amount of investment plans are determined at the will of the large shareholders without proper screening, and as seen from the cases of large business groups of Kia, Hanbo, Halla and Jinro, too much excessive inter-firm guarantees and investments hurt the hole business group when one company of the business group fails.
Others see it as efficiency improving when the asymmetric information in the external capital market causes high transaction costs and limits the access to the external capital market. Economies of scale, flexible flows of information and winner picking in the internal capital martet reduces the transaction costs and improve the informational efficiency.
This paper shows empirically using 5 largest business group data that there exists internal capital markets in the large business groups of Korea and tests whether their existence actually has the effect of improving efficiency. The results reveal that the role of the internal market differs among different business groups. Some groups appear that even the asymmetric information caused by the firm-specific risk does not seriously limit their access to the external capital markets, and others face the limited access to it. Among these, in certain groups, the capital is redistributed in the group-wide internal capital market, while in other groups, each individual company is responsible for its own investment financing.
When the access to the external capital market is limited by the economy-wide general risks such as business cycles or monetary contractions, in some groups, the group-wide internal capital market appears to do an important role for the financing investment expenditure of the group companies while, in other groups, each company takes the responsibility of investment financing.
Conclusively, since the role of the internal capital market differs among different groups, it cannot be said uniformly whether the internal capital market improves the informational efficiency or not. It can be said that, in the groups where the role of the internal capital market gets important, whether it is firm level or group-wide level, as the firm-specific risk and, as a result, information asymmetry increases in the external capital market, the informational efficiency improves.