SEOUL, Aug. 21 (Korea Bizwire) – As the number of overseas subsidiaries to Korea-based companies rises, the financial authorities are strengthening their supervision on these companies’ accounting practices.
According to the Financial Supervisory Service on August 20, of the 1,594 publicly traded companies that close their books in December as much as 76.2 percent (1,214 firms) disclosed their consolidated financial statements. This is up 2.8 percentage points from last year’s 73.4 percent.
The average number of subsidiaries per publicly traded company was 7.2l, up 0.5 from last year’s count. The number was higher for KOSPI-traded firms at 12.1, which is 1.3 higher than last year’s 10.8. By asset size, the average number of subsidiaries for publicly traded firms with more than 2 trillion won in assets was 32.3, up 13.7 percent (3.7 subsidiaries) from the previous year’s 28.4. The figure for those assets below 2 trillion won was 4.2, up 0.2 from last year’s 4.0.
Of these, the share of overseas subsidiaries was 60.8 percent, 1.9 percentage points higher than last year’s 58.9 percent. For those firms listed on both KOSPI and KOSDAQ markets, the share is on the rise.
A Financial Supervisory Service official said, “The reason the share of overseas subsidiaries is rising consistently has to do with the fact that companies, especially large conglomerates, are increasing their investment in foreign business.”
By region, Asia took the largest share of 50.9 percent, with China accounting for more than a half with 27.0 percent. It was then followed by the Americas (25.6%), Europe (18.1%), and the Middle East and Africa (2.8%).
The Financial Supervisory Service official added, “We will conduct a detailed analysis on the current situation of the overseas subsidiaries and strengthen audits on the subsidiaries by third-party auditors for those companies with high exposure to risk.”
By Sean Chung (firstname.lastname@example.org)