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Activist investors twist arms of underperforming South Korean firms

Stakeholders cite weak price-to-book ratios, want better governance and dividends

SM Entertainment, a leading South Korean entertainment agency, is one company that has been subjected to vocal shareholders.

SEOUL/TOKYO -- Activist shareholders are becoming more vocal in South Korea, reflecting discontent with low price-to-book ratios (PBRs), as the key financial ratio of many South Korean companies does not break 1x -- lower than that of Japanese counterparts.

In the first half of 2023, 60 South Korean companies received shareholder proposals, an increase of around 50% from a year earlier, according to research company Insightia. Some proposals have led to dividend hikes, influencing the so-called "Korea discount," which values South Korean companies at a lower multiple to earnings than foreign peers.

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