Further Study on the Financial Changes in Corporate Profitability for Korean Chaebol Firms

Purpose - The purpose of the study investigates the transitional changes in financial profile of corporate profitability for Chaebol firms in the Korean capital market. As an extension of the preceding research inclusive of the study done by Kim Han-Joon (2019a), it attempts to verify or confirm the results obtained from the previous literature by applying different empirical research settings. Design/methodology/approach - Three primary hypotheses were separately tested to identify financial determinants of corproate profitability indices measured by both book- and the market-value bases. During the post-global financial turmoil (2010-2015), total number of sample observations consists of firms in Chaebols listed on the KOSPI stock market as 126 firms across 20 domestic industries and their counterparts belonging to Non-chaebols as 458 in 23 industries. Findings - A majority of the seven explanatory variables in the first hypothesis test show statistical importance for Chaebol firms, that account for two differently defined profitability indices after controlling for industry effects. In contrast, only a few variables reveal their significance to determine the indices for Non-chaebol firms. In the last hypothesis, business risk and intangible assets are revealed to have positively significant effects on the difference between the book-valued and the market-valued profitability for Chaebol firms in the High-tech sector, whereas leverage shows its negative and significant effect in the Low-tech sector. Research implications or Originality - With an aim in finding rigorous determinants of corporate profitability, results of the study are expected to further contribute to attaining maximum corporate profits for both Chaebol and Non-chaebol firms in the domestic capital market.