Predicting firms' corporate governance choices: Evidence from Korea

Bernard S. Black*, Hasung Jang, Woochan Kim

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

136 Scopus citations


This paper contributes to a new literature on the factors that affect firms' corporate governance practices. We find that regulatory factors are highly important, largely because Korean rules impose special governance requirements on large firms (assets > 2 trillion won). Industry factors, firm size, and firm risk are also important. Other firm-specific factors only modestly affect governance even when they are statistically significant. This suggests that many Korean firms do not choose their governance to maximize share price. Among firm-specific factors, the most significant are size (larger firms are better governed) and firm risk (riskier firms are better governed). Long-term averages of profitability and equity finance need are significant, where short-term averages are not. This is consistent with "sticky governance", in which firms alter their governance slowly in response to economic factors.

Original languageEnglish (US)
Pages (from-to)660-691
Number of pages32
JournalJournal of Corporate Finance
Issue number3
StatePublished - Jun 2006


  • Corporate governance
  • Corporate governance index
  • Korea
  • Law and finance

ASJC Scopus subject areas

  • Business and International Management
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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