다국적기업 철수의 영향과 정책대응 방안 (The Economic Effects of MNC (Multinational Corporation) Withdrawal and Policy Responses)

The determinants of foreign divestment in South Korea

“…Foreign divestment is generally defined as a voluntary or forced adjustment in the firm ownership structure that involves a transfer of partial or majority-control over a firm from a foreign to a domestic owner, removing investment capital from stocks, bonds or funds (Benito and Welch, 1997; Arte, 2016; Borga et al , 2020). With ambiguity arising from the term “partial adjustment” or “majority control,” some studies perceive withdrawing financial investments in a particular company below 50% of the total number of shares as divestment (Berry, 2012; Han et al , 2019; Lim, 2020), while some studies perceive foreign owner with over 10% of the total number of shares of the firm still have some power to control the firm or influence the firm decision (Choi and Ra, 2017). Moreover, specific types of divestment are considered in several studies; for instance, Borga et al (2020) exclude business closure from foreign divestment, while Han et al (2019) and Chen and Wu (1996) only consider business closure when investigating the patterns of foreign divestment and retention in South Korea.…”

“…With ambiguity arising from the term “partial adjustment” or “majority control,” some studies perceive withdrawing financial investments in a particular company below 50% of the total number of shares as divestment (Berry, 2012; Han et al , 2019; Lim, 2020), while some studies perceive foreign owner with over 10% of the total number of shares of the firm still have some power to control the firm or influence the firm decision (Choi and Ra, 2017). Moreover, specific types of divestment are considered in several studies; for instance, Borga et al (2020) exclude business closure from foreign divestment, while Han et al (2019) and Chen and Wu (1996) only consider business closure when investigating the patterns of foreign divestment and retention in South Korea. In the case of South Korea, under the Foreign Investment Promotion Act, the condition of foreign invested firm is that foreigners possessing 10% or more of the total number of shares issued in the established firm with a minimum investment of KRW 100m won.…”

“…Han et al (2019) also used the Business Activities Survey of the Statistics Korea between 2006 and 2017 to collect data of 1,276 numbers of foreign invested firms in South Korea, where the foreign stock ratio is higher than 50%. While Lim (2020) uses the number of foreign divested firms in the analysis, Han et al (2019) use the ratio of sales of the foreign invested firms to total corporate sales in South Korea as a proxy of divestment during the sample period.…”