Korea Business Federation (HanKyungHyup), Analysis of Corporate Value Changes Before and After Activist Campaigns, ‘[Edaily Reporter Kim Eung-yeol] A study found that the undervaluation of corporate value might deepen if activist funds become more active.’,
, ‘The Korea Business Federation (HanKyungHyup) released a report titled “The Impact of Activist Campaigns on Corporate Value” on the 21st, which contains such findings.’,
, ‘HanKyungHyup analyzed the corporate value based on the success of activist campaigns in U.S. listed companies with a market capitalization and assets of over $1 billion (approximately 13 trillion won) since 2000 (970 companies, with 549 successful and 421 unsuccessful campaigns).’,
, ‘The analysis revealed a tendency for activist campaigns to succeed mainly with undervalued companies, with a 1.4% point improvement in corporate value within three years if the campaign was successful, somewhat alleviating the undervaluation. However, more than four years after the campaign’s success, corporate value dropped by 2.4% points, exacerbating the undervaluation.’,
, ‘HanKyungHyup identified weakened corporate competitiveness due to reduced employment and investment (capital expenditures) as the cause. In fact, if an activist campaign succeeds, employment decreased on average by 3.0% and capital expenditures by 10.7% from one year before to about two years after the campaign’s success. In the long term, they decreased by 5.6% and 8.4%, respectively. Dividends increased by an average of 14.9% in the short term but returned to pre-campaign levels in the long term.’,
, ‘HanKyungHyup suggested that to enhance corporate value, strategies that could create conditions for a rapid increase in activist campaigns, such as regulatory measures on corporate governance (expanding directors’ duties, making cumulative voting mandatory, expanding the separate election of audit committee members), should be avoided. They argue that if corporate governance laws are legislated in a situation where the number of Korean companies targeted by activist funds has increased 9.6 times in the past five years, it could make it difficult for companies to defend their management rights.’,
, ‘Lee Sang-ho, the head of HanKyungHyup’s Economic and Industrial Division, stated, “To enhance corporate value, companies must focus on investing and hiring while fundamentally increasing competitiveness. Legislative measures favorable to activist funds, such as amending the Commercial Act, should be carefully considered so that companies do not waste resources on defending management rights and can focus on the essence of their business.”‘,
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