Korean firms, and has relied both on legal pressures, including proxy battles, criminal suits, and derivative suits, and on the use of the press to shame corporate leaders into changing their policies Perhaps to an even greater extent than in the United States, the success stories have resulted more from the creation of public opinion pressure than from legal sanctions The most successful challenge to date has been the battle to stop insider dealings in SK Telecom SK Telecom was an extremely profitable company, but its financial results did not show this because the company used transfer pricing to benefit two companies almost 100 percent owned by the chairman of SK Telecom and his relatives. The PSPd drew attention to these policies. After the London-based Financial Times picked up the story, a media campaign ensued to attract proxy votes. This campaign involved publishing advertisements in newspapers and using television and radio. In March 1998 SK Telecoms directors capitulated and agreed to the PSPD's requests This success stands in sharp contrast with the failure of legal actions. For example, shareholders proposals are severely restricted and cannot involve the removal of directors or auditors. Perhaps the only successful legal challenge has been the one to ensure investors' rights to speak at meetings, though the right to speak can only be used to affect the reputation of the parties involved, not to trigger any legal remedy. For example, the press gave extensive coverage to the fact that the Samsung shareholders meeting lasted 13 hours. The effect of shareholder and public opinion pressure was an increase in the transparency of Samsungs financial statements INSTITUTIONAL INVESTORS. While institutional investors have many legal mechanisms to encourage change in corporate policies, the presence of an active press increases their influence. It provides a According to PSPD(2002, p. 3): It was confirmed that SK Telecom channeled huge profits to Sunkyung Distribution, in which Sunkyung Group Chairman Choi Jong-Hyun holds 94.6% shares, and Daehan Telecom, owned 100% by Choi's son and his son-in-law. It was revealed that SK Telecom transferred profits to Sunkyung Distribution and Daehan Telecom by paying exorbitant service fees or purchasing equipment at high prices. Due to SK Telecoms internal transactions, sK Group affiliate Daehan Telecom's business profits increased from only 64 million won to 13.7 billion won, and Sunkyung Distributions business profits increased from -4. 1 billion won to 6.6 billion won. In contrast, SK Telecom, which as the strongest company in 1996 recorded sales of 2.6 trillion won, began showing sharply increased sales costs and sharply decreased profits since becoming part of the SK Group inKorean firms, and has relied both on legal pressures, including proxy battles, criminal suits, and derivative suits, and on the use of the press to shame corporate leaders into changing their policies. Perhaps to an even greater extent than in the United States, the success stories have resulted more from the creation of public opinion pressure than from legal sanctions. The most successful challenge to date has been the battle to stop insider dealings in SK Telecom. SK Telecom was an extremely profitable company, but its financial results did not show this because the company used transfer pricing to benefit two companies almost 100 percent owned by the chairman of SK Telecom and his relatives.2 The PSPD drew attention to these policies. After the London-based Financial Times picked up the story, a media campaign ensued to attract proxy votes. This campaign involved publishing advertisements in newspapers and using television and radio. In March 1998 SK Telecom’s directors capitulated and agreed to the PSPD’s requests. This success stands in sharp contrast with the failure of legal actions. For example, shareholders’ proposals are severely restricted and cannot involve the removal of directors or auditors. Perhaps the only successful legal challenge has been the one to ensure investors’ rights to speak at meetings, though the right to speak can only be used to affect the reputation of the parties involved, not to trigger any legal remedy. For example, the press gave extensive coverage to the fact that the Samsung shareholders’ meeting lasted 13 hours. The effect of shareholder and public opinion pressure was an increase in the transparency of Samsung’s financial statements. INSTITUTIONAL INVESTORS. While institutional investors have many legal mechanisms to encourage change in corporate policies, the presence of an active press increases their influence. It provides a 2 According to PSPD (2002, p. 3): “It was confirmed that SK Telecom channeled huge profits to Sunkyung Distribution, in which Sunkyung Group Chairman Choi Jong-Hyun holds 94.6% shares, and Daehan Telecom, owned 100% by Choi's son and his son-in-law. It was revealed that SK Telecom transferred profits to Sunkyung Distribution and Daehan Telecom by paying exorbitant service fees or purchasing equipment at high prices. Due to SK Telecom's internal transactions, SK Group affiliate Daehan Telecom's business profits increased from only 64 million won to 13.7 billion won, and Sunkyung Distribution's business profits increased from -4.1 billion won to 6.6 billion won. In contrast, SK Telecom, which as the strongest company in 1996 recorded sales of 2.6 trillion won, began showing sharply increased sales costs and sharply decreased profits since becoming part of the SK Group in 9