When Big Is Slow

Tax-Motivated Income Shifting and Dividend Payouts of Korean Chaebols After the Transition to a Territorial Tax System

Bibliographic Data

ID22006527
AuthorsJi Seon Yoo (0000-0002-1426-0626, Kookmin University, corresponding author)
Year2025
Volume15
Issue4
Publication date2025-10-01
Open AccessYes
TypeARTICLE
VenueSAGE Open (JOURNAL)
Journal identifiersISSN: 2158-2440 • E-ISSN: 2158-2440
PublisherSAGE Publications (PUBLISHER • US)
DOI10.1177/21582440251410421
OpenAlexW7117531448
LanguageEN
References cited50

This study examines the influence of organizational characteristics on the agility of tax-planning decision-making by the Korean business groups known as chaebols. Using South Korea’s transition from a worldwide to territorial tax system in 2023 as a quasi-exogenous shock, a triple-differences analysis shows that Korean multinational corporations (MNCs) engaged in tax-arbitrage transactions by significantly increasing tax-motivated income shifting and dividend payouts following the reform. In addition, chaebol MNCs were less responsive than non-chaebol MNCs. The results suggest that the complex and hierarchical organizational structures of chaebols hinder swift strategic adjustments in response to tax-policy changes, consistent with strategic agility theory. This study is the first to empirically examine the impact of South Korea’s transition from a worldwide to territorial tax system. In addition, it provides an interdisciplinary contribution to relevant literature by integrating the management theory of strategic agility and international taxation

Chaebol · Corporate governance · Dividend · International business · Multinational corporation · Strategic management · Corporate Finance and Governance · Corporate Taxation and Avoidance · International Business and FDI

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Open DOIOpen Access