The Temporal Duality of Insider Share Pledging: Short‐Term Incentives and Long‐Term Discipline in Korean Firms*
Abstract
Abstract This study analyzes the temporal duality of insider share pledging in Korea using a regulation‐based definition of insiders. We show that short‐term pledging firms exhibit superior performance, higher value, and lower volatility, coincident with upward earnings management for price support. In the long term, enhanced external monitoring disciplines this opportunism, reducing earnings management and volatility. Consequently, pledging functions as a dynamic process—evolving from a short‐term incentive mechanism into a long‐term disciplinary force—rather than a static tool, highlighting the importance of considering time‐varying effects when evaluating the governance implications of pledging.
Fields of Study & Subjects
Corporate Finance and Governance
Auditing
Earnings Management
Governance
Financial Markets and Investment Strategies
Publication details
- Journal / source
- Asia-Pacific Journal of Financial Studies
- Volume
- 55
- Issue
- 5
- Pages
- 536–561
- Publication date
- 5 March 2026
- Language
- EN