After the IMF crisis of 1997, rapid chaebol reform was started by the Kim Dae-jung administration. Korean chaebol, characterized by two features; absolutely closed concentration of ownership within the family of the founder, and their highly diversified business structure, were considered as main culprits causing the IMF crisis. Chaebol reforms were initiated by two aspects; one is to destroy the traditional characteristics of chaebol, the other is to build an Anglo-American corporate governance system. Through forcible chaebol reform by the government, accountability, transparency and financial health in the chaebol were drastically improved. For example, the obligation for outside directors was enforced on large scale chaebol affiliates. However, the most important issue is whether the outside directors actually have adequate power to monitor the absolute control by the owners. The outside directors system is just an initial step. The rapid increase of foreign ownership has become one of the most important issues after the crisis; which has brought two aspects, the acceleration of the Anglo-American corporate governance system, and the risk of M&A. Defending the right of management has been a serious issue for chaebol. For the purpose of acquiring the global competitiveness, an Anglo-American corporate governance system would have to be harmonized with the traditional Korean business climate, especially the chaebol system.

The 21st century center of excellence program "Policy innovation initiative: human security research in Japan and Asia"