Abstract
ABSTRACT I show that chaebol-affiliated firms in industries heavily (less) affected by the COVID-19 outbreak experienced on average larger (smaller) declines in value than did their industry peers during the COVID-19 “crisis” period in early 2020. Although those in heavily affected industries saw larger increases in value during the “recovery” period in mid-2020, they did not outperform similar non-chaebol firms throughout the crisis and recovery periods, unlike chaebol-affiliated firms in less affected industries. I also find evidence that chaebol-affiliated firms in less affected industries were subsidized by other affiliates via related party transactions following the COVID-19 outbreak. Overall, I document that the value of business group affiliation during a crisis for minority shareholders is conditional on industry performance.
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