[Reporter's Notebook] Companies Ignoring "PBR Improvement Plans" Should Face Mandatory Tender Offers

"There is no penalty for failing to file a disclosure, so why set a PBR (price-to-book ratio) target? If we fail to meet it, we will only give shareholders ammunition to attack us."

To encourage companies to boost their corporate value, financial authorities designated 151 listed companies as low-PBR (price-to-book ratio) companies and published the list. A representative of one of the listed companies on the list gave this response when asked whether it would improve its PBR.

The authorities published the list to encourage companies whose shares trade below their net asset value to voluntarily improve their corporate value. Even if a company is designated as a low-PBR company, publication of its name on the list will be deferred if it discloses a plan to improve its corporate value.

Despite the authorities' efforts to pave the way, however, a considerable number of companies have failed to meet market expectations. Because plans to improve corporate value are subject to voluntary disclosure, there is no way to compel companies to submit them or penalize them for failing to do so. Avoiding disclosure of a plan to improve PBR shows an unwillingness to engage even in the bare minimum of communication with shareholders.

The purpose of listing on the stock market is to raise funds from ordinary shareholders and use them to grow. Promising future value when raising funds, then avoiding even the minimum effort to improve when corporate value hits rock bottom, betrays shareholders' trust. Companies with no commitment to enhancing shareholder value do not deserve to remain listed.

Effective sanctions are needed for companies that hide behind the label of "voluntary" disclosure, refuse even to submit improvement plans, and mislead the market. Loose regulations that rely solely on voluntary participation cannot resolve Korea's chronic discount. If a company disregards its shareholders and undermines the vitality of the stock market, authorities should also actively pursue measures to force it toward delisting through a mandatory tender offer requiring its controlling shareholder to buy all publicly held shares at a fair price. Protecting minority shareholders' rights while decisively removing unqualified companies from the market is the true starting point for a stock market value-up.

This content was produced with the assistance of AI translation services.