A Study on the Relationship between Market Value and the Investment Behavior of Family Business Groups: Focusing on the IT Industry

Abstract

Purpose – The purpose of this study is to analyze the relationship between large business groups and investment behavior in the IT industry, analyze whether there is a difference in the relationship between the two depending on the level of market evaluation of the firm, and present the implications of the results to the capital market. Design/Methodology/Approach – This study conducts T-Test and OLS regression analysis on 5,214 firm-year data belonging to the Korean IT industry from 2012 to 2020. Findings – The results analyzed in this study are as follows. First, the investment behavior of IT firms differs depending on whether they are a large business group. Those belonging to large business groups are relatively under-invested. Second, there is a difference in the relationship between market value level and investment behavior depending on whether there is a large group of IT firms. Only the non-large group appears to have an over-investment propensity when the market value level is higher. Third, there are differences in investment behavior by market value level (upper/lower) depending on whether or not IT firms are large-scale business groups. Research Implications – The results of this study provide evidence that companies in the IT industry should consider the level of market value when making investment decisions, and are believed to contribute to the respective decision-making of stakeholders and market participants.