Investment by Korean conglomerates before and after the crisis

Kiseok Hong, Jong Wha Lee, Young Soo Lee

Research output: Contribution to journalArticlepeer-review

7 Citations (Scopus)


This paper analyzes the investment behavior of the Korean corporate sector before and after the 1997 financial crisis. Using firm-level data, we find that after controlling for investment profitability and cash flows, Korean conglomerates ('chaebol')-affiliated firms, particularly ones with low-managerial ownership, made significantly higher investments than non-chaebol firms before the crisis. In contrast, this difference in investment volume between chaebol and non-chaebol firms is no longer existent in the period following the crisis. We find the sharp reduction in investment by chaebols in the post-crisis period can be attributed mainly to the need to moderate their debt burden. It is not clear, however, whether these changes indicate an improvement in investment efficiency.

Original languageEnglish
Pages (from-to)347-373
Number of pages27
JournalJapan and the World Economy
Issue number3
Publication statusPublished - 2007 Aug


  • Chaebol
  • Corporate investment
  • Debt/asset ratio
  • Financial crisis
  • Korean conglomerates

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Political Science and International Relations


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