무차입경영과 Tobin’s Q: 재벌기업집단과 비재벌기업집단 비교

Zero Leverage Policy and Tobin’s Q: The Comparison between Chaebols and Non-chaebols

Purpose - The purpose of this study is to examine the effect of ZL(Zero leverage) policy on Korean firm’s profitability, as measured in Tobin’s Q. Our intention is to capture heterogeneity between chaebol and non-chaebol affiliates, with focus on the presence/absence of dividends. Design/methodology/approach - This study conducted panel regression analysis for 8,146 Korean firm observations, which are composed of 5,350 chaebol-affiliates and 2,748 non-chaebol affiliates in consideratioin of the presence/absence of dividends. Findings - First, this study finds that, by incorporating dividend payment status, a zero-leverage policy reduces profitability among Korean firms. Second, our analysis reveals that non-chaebol firms, which lack the internal funds and financial capacity typically available to chaebol-affiliates, experience a decline in profitability in the absence of dividends. Third, the study conducts robustness tests using free cash flow (FCF) and confirms that profitability significantly decreases for non-chaebol affiliates without dividends, regardless of the level of FCF. Research implications or Originality – Our research implies that non-chaebol firms, which have limited capacity to generate or retain cash and thus face greater financial constraints in paying dividends, are more likely to experience a decline in profitability (Tobin’s Q) compared to chaebol-affiliated firms. This well-aligns with previous findings on the characters of Korean firms.