Economics & Finance / Business & Management / Corporate Strategy & Governance

The Shocking Truth: Why Good Companies Crashed Harder in Korea's 1997 Crisis

Campbell Harvey, Karl Lins, Andrew Roper

In 1997, South Korea's financial crisis wiped out billions in market value. But not all companies fell equally. This video breaks down a landmark study from the Journal of Financial Economics (2004) by Campbell Harvey, Karl Lins, and Andrew Roper. It reveals the hidden corporate governance flaws that turned a macro shock into a micro disaster. Discover why firms with concentrated family ownership, weak transparency, and heavy reliance on bank loans suffered the most—and how a few key governance features, like foreign investor oversight and U.S. ADR listings, protected others. This isn't just history; it's a masterclass in why governance matters when the economy tanks.