ABSTRACT
Corporate restructuring has involved improving corporate governance, reducing debt/equity ratios, empowering minority shareholders, and corporate downsizing. The government has also pushed for corporate restructuring through the so–called Big Deals, but with indifferent, if not negative, results. At the time of the 1997 crisis the chaebols had various weaknesses in their corporate governance. This chapter details the government's and the Financial Supervisory Commission's (FSC's) measures to reform and restructure the corporate sector. As a result, the FSC is the top government body guiding both Korea's financial sector reform and the corporate sector reform. Institutional investors were hindered in influencing corporate management, and the main creditors of the chaebols, with no presence on Korean corporate boards, were unable to exercise needed discipline. The government has contended, and rightly so, that the complex web of inter–subsidiary debt guarantees is a major obstacle to an effective corporate reform and restructuring.
