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korean management review - Vol. 53 , No. 2

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[ Article ]
korean management review - Vol. 53, No. 2, pp. 465-492
Abbreviation: kmr
ISSN: 1226-1874 (Print)
Print publication date 30 Apr 2024
Received 07 Dec 2023 Revised 18 Feb 2024 Accepted 26 Feb 2024
DOI: https://doi.org/10.17287/kmr.2024.53.2.465
A Re-examination of the Announcement Effect of Block Share Acquisitions by Heterogeneous Foreign Investors
Byungkwon Lim ; Hyangmi Choi
(First Author) Department of Technology Practical Convergence. Chungnam National University (bk81.lim@gmail.com)
(Corresponding Author) School of Business, Chungnam National University (hmchoi@cnu.ac.kr)
이질적 외국인 투자자의 대량지분취득 공시효과에 관한 재고찰

Copyright 2024 THE KOREAN ACADEMIC SOCIETY OF BUSINESS ADMINISTRATION This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted, distribution, and reproduction in any medium, provided the original work is properly cited.


Funding Information ▼ Ministry of Education National Research Foundation of Korea NRF-2023S1A5A2A01079015

Abstract

This paper revisits the announcement effect of foreign blockholders’ share acquisitions for 14 years from 2005 to 2018. We classified heterogeneous foreign block shareholders based on criteria such as new acquisitions, investment purposes, tax haven status and legal systems of foreign investors’ origin countries. The empirical results of the event study conducted using 1,471 disclosures, are as follows. We find positive stock returns associated with foreign investors’ block acquisitions before and after the announcement date. The positive stock returns are more pronounced in new acquisitions involving management participation. We also find the interaction effects between new acquisitions and legal systems; specifically, the ownership of foreign blockholders from tax-havens mitigates the positive impact of new acquisitions, while the ownership of foreign investors from common-law countries reinforces the impact. The results demonstrate discriminatory impact of heterogeneous foreign blockholders on firm value, depending on the characteristics of foreign blockholders. This suggests that the Korean stock market is more responsive to initial investments involving management participation by foreign blockholders from common-law countries.


Keywords: Foreign investors, Block share acquisitions, Management participation, Tax haven, Common-law countries

Acknowledgments

This work was supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea(NRF-2023S1A5A2A01079015)

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∙ The author Byungkwon Lim is a collaboration professor of the Department of Technology Practical Convergence at Chungnam National University. He received his Ph. D. in business administration from Chungnam National University. His main research areas are corporate finance, SMEs finance and housing finance.

∙ The author Hyangmi Choi is a professor of finance at the School of Business of Chungnam National University. She received her Ph. D. in business from Seoul National University. Her areas of interest include international finance, energy finance and SMEs finance.