Overview of Chaebol Firms Corporate Governance

The downfall of many South Korean (will be referred to as Korean in the scope of this paper) business groups, namely the chaebols in 1997 was so devastating to the Korean economy that its government was forced to accept a US$58 billion bailout from the International Monetary Fund (IMF). However, the IMF fund was not provided unconditionally; Korean government had to improve its economic competitiveness in many areas to satisfy the demands required by the IMF, of which corporate governance was of utmost importance. Many studies has scrutinized poor management practice of corporate governance, specifically in the chaebol firms as one of the main drives behind the collapse of Korean economy (Chang, 2006, Lee, 2002, Nam, 2001, Kim, 2004), some even set it as case study of how corporate governance could relate to firm values and company performance (Black, Jang and Kim, 2005, Baek, Kang and Park, 2002); and more specifically, the impact of having outside directors on board (as an aspect of corporate governance) on firm performance (Choi, Park and Yoo, 2007). Given the recentness of the studies, corporate governance is an ongoing issue in Korean firms that needs to be fully understood in order to explore the performance of firms in micro level, and the economic competitiveness of a whole economy on a macro level. Therefore, this paper is intended to discuss the conceptualization of modern corporate governance, apply it to bring outstrengths and weaknesses of corporate governance of Korean firms (mainly focused on chaebol companies) before the 1997 crisis, and analyse the outcomes resulting from many changes implemented by the government concerning corporate governance practices in Korean firms since then, utilising external academic research available online.
This section is dedicated to explore the concepts of corporate governance in literatures. Corporate governance is a newly concept in modern business environment, linking many different managerial theories such as

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