The Korean Economic Crisis and Corporate Governance System

Sung Wook Joh

in Governance, Regulation, and Privatization in the Asia-Pacific Region

Published by University of Chicago Press

Published in print March 2004 | ISBN: 9780226386799
Published online February 2013 | e-ISBN: 9780226386966 | DOI:
The Korean Economic Crisis and Corporate Governance System

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Korea's 1997 economic crisis was attributed to the massive creditor and investor flight from the Korean currency market. However, this argument ignores both Korea's low corporate profitability over the last decade and the fundamental causes of the financial sector's weakness. This chapter begins with a discussion of how high debt-equity ratios and low profitability helped cause the 1997 Korea economic crisis. It then examines their determinants and how poor corporate governance allowed such low profitability to occur for so long. Finally, recent reforms and their preliminary results are discussed. Two commentaries are also included at the end of the chapter.

Keywords: financial crises; investor flight; currency market; corporate profitability; debt-equity ratios; corporate governance

Chapter.  10422 words.  Illustrated.

Subjects: Business and Management

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