Companies leaving back doors open: The real reason parent-subsidiary listings arise (Professor Kim Ji-young)

Professor Kim Ji-young examines the structure behind Korea's controversy over parent-subsidiary listings, prompted by reports that SK hynix subsidiary Solidigm is considering a Nasdaq listing. She argues that parent-subsidiary listings are directly linked to the Korea discount and identifies tax-driven corporate governance problems as the root cause. She points out that although the current guidelines emphasize the 3% rule, they leave back doors open through exemptions for insignificant subsidiaries, exclusions from review, and a blind spot concerning overseas listings. She explains that Boston Dynamics is a loss-making company accounting for only 0.08% of consolidated revenue, yet its market-estimated valuation amounts to 30~100% of Hyundai Motor's market capitalization; nevertheless, it can pursue a parent-subsidiary listing under the insignificant-subsidiary exemption. She emphasizes that operating profit is reported on a consolidated basis, but when non-controlling interests are substantial, it does not all belong to the parent company's shareholders, so investors need to look at net income attributable to controlling shareholders. She analyzes how, in the pyramid structure running from SK through SK Square to SK hynix, the controlling shareholder's effective ownership is only in the 1% range, and the divergence between dividend rights and voting rights produces irregular structures. Although amendments to the Commercial Act introduced directors' duty of loyalty to shareholders, she worries that unless the gap between form and substance and corporate culture change, it will be difficult to prevent listings across 5 tiers and the spread of broken-window behavior. All directional outlooks are the speaker's conditional judgments, not definitive predictions of short-term prices.