ESSAYS ON BUSINESS GROUPS AND THE JUDICIARY IN SOUTH KOREA

[摘要] The first chapter explores how the size of a corporation undermines a court’s willingness to mete out tough sentences to corporate criminals, employing a unique dataset of Korean white-collar offenders. I find that the Korean judiciary displays a strong bias towards chaebols, family business groups: the likelihood that convicted chaebol-related defendants receive suspended jail sentences rises compared to that of convicted non-chaebol counterparts. The finding further shows that a greater bias can be observed for the top 10 business groups than for any of the lower ranking chaebols. Finally, I show that controlling for the in-group transactions, the bias is significantly diminished, which is consistent with the claim that a civil-law allows substantial expropriation of minority shareholders by weighing business group’s interests.The second chapter empirically investigates whether connections influence judicial decisions. Using data on Korean white-collar criminals, I investigate whether the judiciary favors newly retired senior judge attorneys (called 'Revolving door attorneys) by giving their clients light criminal sanctions. I find that convicted white-collar offenders defended by Revolving door attorneys are more likely to receive suspended jail terms than those represented by ordinary attorneys. I find that the impact is discontinuous after the first year of departure from the judiciary: former senior judge attorneys who represent cases more than one-year after retirement do not alter the likelihood of leniency for clients. Lastly, I find that observed leniency disappears when cases become subject to media scrutiny, which suggest causal linkage between connections and lenient criminal penalties.The final chapter presents a CEOs' career-concerns model for the formation of business groups by focusing how different corporate structures induce CEOs to signal their talent to markets. The paper shows that with better legal protection of investors and an efficient monitoring system for firms' performance, CEOs can increase rents by choosing business groups. Why? Since they manage the subsidiaries of business groups, they have multiple channels (i.e., each firm in the groups) where they signal their ability to other shareholders relative to a large firm with multi-divisions. This leads CEOs to be less responsive to market pressure.

[发布机构] the University of Pittsburgh