[Interview with Professor Woochan Kim, Recipient of the Hongjo Order of Service Merit]

Leading Corporate Governance Reform with Unwavering Conviction

On April 1, Professor Woochan Kim received the Hongjo Order of Service Merit at the 25th Fair Trade Day ceremony, hosted by the Korea Fair Trade Commission, in recognition of his contributions to establishing a fair and competitive market order.
Having long been at the forefront of corporate governance reform, Professor Kim has consistently raised critical questions about Korea’s corporate governance system. More recently, he has expanded his work into the policymaking arena by serving on a number of national advisory bodies and committees.
In this interview, Professor Kim reflects on the path he has taken, shares his views on corporate governance reform and economic growth, and offers advice to students. Below is an edited transcript of the interview.

Q1. Congratulations on receiving the Hongjo Order of Service Merit. Could you share your thoughts on receiving the honor?

First, I would like to express my gratitude to everyone who has supported me. The achievements for which I received this honor were the result of a collective effort by my colleagues and me.
I could never have received this honor without the support of the full-time research fellows at the Solidarity for Economic Reform and the Economic Reform Research Institute. I would like to extend my sincere thanks to all of them.

Q2. You were recognized for your efforts to curb self-dealing and improve related regulations through your work as Director of the Economic Reform Research Institute and in other roles. What does this honor mean to you personally?

The path of corporate governance and chaebol reform that I have pursued has never been an easy one. Because the issues we address are deeply connected to structural interests within our society, bringing about change requires considerable time and patience.
At times, I found myself wondering, “Why am I doing this?” or “Could I be doing something wrong?” Receiving this honor validated the path I have taken and reassured me that I have been moving in the right direction.

Q3. Was there a defining moment that first sparked your interest in corporate governance and led you to make it your lifelong work?

I gradually found myself drawn to the field. I first learned about corporate governance while studying abroad. During my doctoral studies, I attended a guest lecture by Professor Andrei Shleifer of Harvard University’s Department of Economics. Hearing him explain corporate ownership structures was what first drew my attention to the field.Then the Asian financial crisis occurred. At the root of the crisis was the chaebol problem. Korean banks borrowed funds in foreign currencies, converted them into Korean won, and lent the money to chaebol groups. The chaebol groups failed to use those funds effectively and were unable to repay their debts, which contributed to the financial crisis. That was when I realized that the chaebol issue was a problem of national importance.
After becoming a professor, I joined the People’s Solidarity for Participatory Democracy and participated in the minority shareholder movement with Professor Hasung Jang. I found it rewarding to take direct action, such as attending shareholders’ meetings and filing shareholder derivative suits. I later joined the Solidarity for Economic Reform when it was established and have remained involved ever since.

Q4. On March 31, you stepped down as the founding Director of the Economic Reform Research Institute, which you had led since its establishment. What led you to step down after such a long tenure? We would also like to know the most valuable takeaway from your time as Director.

Our work began with the Economic Democratization Committee of the People’s Solidarity for Participatory Democracy. In 2006, several of us who had worked together left the organization and founded the Solidarity for Economic Reform.
Soon afterward, we concluded that its activities needed to be supported by empirical policy research, and we launched the Economic Reform Research Institute in 2009. I served as its founding Director for 17 years. I had been considering stepping down for several years, and as my external responsibilities suddenly increased this year, I decided that it was time to leave the position.
One of the most important lessons I learned while leading the institute was that capable members are more important than anything else if an organization is to function effectively. The members of our organization are exceptionally capable experts who work largely behind the scenes. No matter what I ask them—even about subjects I know little about—they can provide an answer within minutes.
I also learned how important it is for capable individuals to share common values. Everyone at the institute shares the same mission and sense of purpose: improving corporate governance. Because of this shared commitment, we have been able to resolve differences of opinion without much difficulty.
I believe I was able to achieve many meaningful results over the past 17 years because I had the opportunity to work with such talented and committed people.

Q5. In March, you were appointed as a member of the Growth Economy Subcouncil of the National Economic Advisory Council. How do you believe corporate governance is connected to the country’s medium- and long-term economic growth strategy?

The central challenge in achieving sustainable economic growth is determining how efficiently we can use the capital and labor available to us. Corporate governance reform is therefore essential to improving the efficiency of capital.Shareholders provide capital to a company with the expectation that its managers will use it efficiently. In many cases, however, managers invest in non-core businesses or hold real estate unrelated to the company’s operations.
In many cases, returning such funds to shareholders through dividends would represent a more efficient allocation of capital. If shareholders then invest those dividends in more productive companies, the efficiency of capital allocation across the economy as a whole will improve.

Q6. You were also appointed vice chair of the Financial Consumer Protection Advisory Committee at the Financial Supervisory Service. In your role as a champion for financial consumers, is there a particularly urgent issue that you would like to address?

It would be difficult to single out just one urgent issue. Financial consumer protection can be broadly divided into four areas. First, there is the problem of mis-selling in the design and sale of financial products. Second, there is financial crime. As technology continues to advance, the number of victims of phishing scams has been increasing. Third, the threat of cyberattacks is also growing.

Finally, there is the need to promote inclusive finance and shared growth initiatives. Financial support and protection for vulnerable groups are equally important.
All of these issues are important, so it is difficult to say that any one of them is more urgent than the others. The Financial Consumer Protection Advisory Committee is the highest-level advisory committee within the Financial Supervisory Service, demonstrating how seriously the agency regards financial consumer protection.

Q7. You also lead research at Korea University as Director of the Asian Institute of Corporate Governance. What unique contribution can a university research institute make to society that national advisory bodies or civic organizations cannot?

The Asian Institute of Corporate Governance is Korea’s first and virtually only university-affiliated research institute dedicated to corporate governance. Taking advantage of its position within a university, the institute contributes through academic research rather than policy research. In addition to traditional corporate governance issues, we have broadened the scope of our work by supporting research projects related to environmental, social, and governance issues.

We also feature internationally renowned professors at our annual online symposium.

Q8. Last November, the second National Corporate Governance Competition for Students was held by the Korea Corporate Governance Forum and the Asian Institute of Corporate Governance. Was there a particular reason or concern that led you to organize the competition? Were there any student proposals from the competition that particularly stood out to you?

The first competition was open only to students at Seoul National University School of Law. However, the number of participants fell short of our expectations. For the second competition, we therefore opened it to undergraduate students in order to encourage broader participation.
The fundamental purpose of the competition is to encourage university students to take a greater interest in corporate governance issues and understand their importance. Many students participated in the second competition, so I believe we accomplished that objective.
All of the participants presented outstanding ideas, but the Gold Prize-winning team was the most memorable. What distinguished the team was that it proposed an idea that controlling shareholders could also accept.
Most of the other teams made proposals that were unlikely to be accepted in practice, but the Gold Prize-winning team presented an approach that could also provide economic benefits to controlling shareholders. I found that particularly impressive.

Q9. What issues do you hope Korea University Business School students who aspire to enter the field of corporate governance research will consider during their university years?

After graduation, many business school students enter fields that provide professional services to companies. In many cases, however, their work ultimately serves the interests of controlling shareholders or individual executives.
I hope students recognize that there is also a third path. They can choose to stand with shareholders and pursue work that contributes to corporate governance reform.
This field remains very small at present, but it may grow considerably in the future. I hope students will also consider careers in this direction.

Q10. While concluding some of your previous responsibilities, you have also taken on many new positions. Do you see this period as a turning point in your life? Finally, what is your next goal or challenge?

I do not think of it as a particularly significant turning point. I have continued to do the same kind of work, and I intend to keep doing it in the future.
As for my next challenge, I am considering a new form of publication that is neither a conventional printed book nor a standard e-book. I am thinking about creating a book using Notion, which would allow me to incorporate multimedia content, include a variety of links, and continually revise and update the material.

Corporate governance reform involves a complex web of interests and can therefore become a lonely struggle. Nevertheless, Professor Kim has continued this work steadily, regarding it both as a mission and as something he genuinely enjoys.The path he has followed with unwavering conviction is far from over. He continues to move forward, taking on the challenges that remain unresolved.

KUBS Student Press | Reporting by Jinyoung Kim