한국의 기업환경과 재무구조

Business Environment and Corporate Financial Structure in Korea

This paper studies the effect of the government economic policy and the optimizing behaviors of financial institution and business firm on corporate financial structure. Specifically, it analyzes the effect of government financial and industrial policies, firm's cost of financial distress, the agency cost of debt, firm's profitability (under information asymmetry) and corporate tax shields. The empirical result suggests that government financial policy, characterized by protection and regulation including interest rate regulation, has induced firms to highly depend on debt. The regulation on interest rates, that keeps the actual rates below the market rates to stimulate investment, has lowered the cost of borrowing and, thus, induced firms to issue more debt. Government protection and regulation in real sector appears to have aggravated firms' dependency on debt, too. Firms are able to maintain stable level of profit under protection and regulation once they enter the market although their freedom of business activity was somehow restricted. Further, the business risk of firm is decreased by the government preventive measure against bankruptcy such as financial ball-out and government-led mergers and acquisition. Thus, a firm considers less seriously the adverse effect of debt-financing on its business risk compared with in the absence of government intervention, and attempts to maximize its value by expanding sales instead of focusing on improvement of operating efficiency. In addition, the empirical result suggests that Korean firms are inclined to increase asset to use as collateral, and form conglomerates to utilize cross debt guarantee. On the other hand, firms lack financial reserves due to the heavy burden of financial expenses, and, therefore, have difficulty in raising equity capital from the internal source.