Establishing a New Stock Market for Shareholder Value Oriented Firms in Korea

51 Pages Posted: 10 Jun 2002

See all articles by Stephen J. Choi

Stephen J. Choi

New York University School of Law

Kon Sik Kim

Seoul National University; European Corporate Governance Institute (ECGI)

Abstract

We propose introducing more competition into the design and implementation of investor protection in Korea. Our proposal in Korea is to start small. We focus on the possibility of giving firms in Korea greater choice within the existing regulatory regime. As an initial (and obtainable) goal we propose taking an approach similar to that pursued by the Brazilian Stock Exchange (Bovespa) to establish a new voluntary section for firms satisfying global corporate governance standards on the Korean Stock Exchange (KSE). Another option would be to go the seemingly opposite direction and allow some firms to opt out of any domestic regulation and instead to follow the regulatory regime of a foreign country (putting these firms in their own section of the stock market and enhancing the level of enforcement of foreign regulators through the assistance of Korean regulators). Such an approach would allow firms the ability to choose for themselves - within limits - the level of investor protections they desire (through a listing on a foreign exchange). Firms already with large and entrenched controlling shareholders or managers and a dispersed pool of minority investors will probably not take advantage of the ability to opt into a higher level of corporate governance. Instead, our suggested reforms will assist primarily newer companies seeking to raise funds from the public capital markets for the first time. Also, even among more established firms, a small, yet growing, number of firms under professional management may be interested in moving into a more advanced section of the KSE. Indirectly, we predict that feedback effects through the creation of a new investor-protection environment (with accompanying norms and institutions) will affect the rest of Korea's capital markets.

Suggested Citation

Choi, Stephen J. and Kim, Kon Sik, Establishing a New Stock Market for Shareholder Value Oriented Firms in Korea. Available at SSRN: https://ssrn.com/abstract=314921 or http://dx.doi.org/10.2139/ssrn.314921

Stephen J. Choi (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States

Kon Sik Kim

Seoul National University ( email )

Kwanak-gu
Seoul, 151-742
Korea, Republic of (South Korea)
02-880-7581 (Phone)
02-871-7408 (Fax)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
362
Abstract Views
2,482
Rank
151,263
PlumX Metrics