This paper provides policy suggestions for corporate governance in Korea. We
focus more on self-regulations than law and government regulations. First, we
argue that the firm is not an individual, but a nexus of contract based on the
theory of a firm. Secondly, Korean business groups need to transit from
complicated ownership structure like a pyramid to pure holding companies and
stop doing inside trading between affiliated firms within the same business
group. Thirdly, it is important for Korean business groups to actively
communicate with institutional investors. Lastly, Korean business groups should
reallocate the decision-making power among controlling shareholders,
professional managers and boards of directors.