South Korea's market watchdog takes a tougher stance on shareholder returns

Analyze how South Korea’s market watchdog is cracking down on companies for failing to boost shareholder returns, signaling a reform.

South Korea’s financial landscape is undergoing a shift as its market watchdog takes a tougher stance on companies that fail to boost shareholder returns. The move comes in the wake of a reform package aimed at encouraging voluntary efforts, which was met with disappointment in the market.

Warning from the Financial Supervisory Service

The Financial Supervisory Service, led by Governor Lee Bok-hyun, has issued warnings to companies regarding their shareholder return practices, hinting at possible penalties for non-compliance. Governor Lee emphasized that authorities are discussing various measures to deal with firms failing to meet certain criteria regarding shareholder returns.

Penalties for Non-Compliance

While these steps were not part of the corporate reform package announced earlier, Lee assured that they would be incorporated once details are finalized. The possible penalties include removing non-compliant firms from the stock market, a move that could have significant implications for companies failing to prioritize shareholder returns.

The Corporate Value-up Programme

The reform plan, known as the “Corporate Value-up Programme,” aims to boost shareholder returns and reduce the “Korea discount,” where South Korean companies are undervalued compared to their global peers. The program is a response to factors such as low dividend payouts and the dominance of opaque conglomerates known as chaebols, which have contributed to the Korea discount.

Analysts’ Response

However, many analysts feel that the reform package falls short of expectations, citing a lack of details and the absence of penalties or tax benefits to incentivize companies to make changes. The reaction from analysts underscores the challenges facing South Korea as it seeks to enhance shareholder returns and improve corporate governance.

Market Performance

On the market front, the KOSPI Index rose by 1.04% on Wednesday, reaching 2,652.29. The positive movement in the index reflects investor optimism despite the challenges facing the Korean market. The KOSPI Index’s performance is closely watched by investors and analysts as an indicator of the overall health of the South Korean economy.


In conclusion, South Korea’s market watchdog’s tougher stance on shareholder returns reflects a broader push toward greater accountability and transparency in corporate governance. While the reform package is a step in the right direction, more concrete measures may be needed to address the underlying issues contributing to the Korea discount.

Disclaimer: This post has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.