[Series] ② The Choice of Global Companies: ‘Dual Listing’ and ‘Single Listing’

In Korea, cases of “dual listing,” where both a parent company and its subsidiaries are listed separately, frequently occur. Dual listing can lead to conflicts of interest among investors and distortions in corporate value, which are often pointed out as characteristics of the corporate structure in Korea.

In contrast, overseas examples show that major companies such as Apple and Alphabet tend not to list their subsidiaries separately when the parent company is already listed.

Vertical Integration Model and Single Listing

Apple, one of the world’s largest IT companies, operates diverse businesses ranging from hardware like iPhone, iPad, and Mac to services like App Store and iCloud. However, Apple’s subsidiaries, such as Apple Operations International or Beats Electronics, are not separately listed.

This structure allows Apple to maintain complete control over all its business divisions and prevents potential conflicts of interest that could arise from subsidiaries being listed.

For instance, if Beats Electronics had been independently listed, its profitability and strategy might have conflicted with Apple’s overall direction. Conversely, the current structure, where subsidiaries are not listed, enables Apple to maintain a tightly integrated vertical model, maximizing efficiency.

Additionally, single listing allows investors to evaluate the overall performance of the company as a whole. Instead of focusing on the individual performance of subsidiaries, the market can assess Apple’s overall value, reducing confusion and enhancing shareholder trust.

Holding Company Model with Subsidiaries

In 2015, Google restructured itself by establishing a holding company, Alphabet. Alphabet owns various subsidiaries, including Google, Waymo, and Verily, but none of these subsidiaries are independently listed.

The reason Alphabet chose this model is that the value of the subsidiaries can be sufficiently reflected in the parent company’s valuation without the need for separate listings. This approach also prevents corporate value distortions and investor confusion that could result from subsidiaries being listed. For example, if Waymo, which researches autonomous driving technology, had been separately listed, its high-cost structure during the early research stages might have sent negative signals to the market. However, Alphabet has been able to positively influence its stock price based on Waymo’s long-term growth potential.

The Absence of a Duplicate Listing

The absence of dual listing among major global companies provides several key advantages. Not listing subsidiaries enables the transparent evaluation of overall corporate value. Through a single listing model, investors can assess the company as a unified entity, eliminating the complexity of separate subsidiary performances. This streamlined structure enhances market trust and simplifies corporate valuation.

Additionally, it allows companies to maintain strategic consistency. Independent subsidiary listings often lead to conflicts of interest among shareholders, potentially disrupting the parent company’s strategic direction. By avoiding such listings, companies ensure that their overall vision and strategies remain aligned without external interference.

Moreover, a single listing highlights long-term growth potential. It shifts the focus from short-term financial performance to the company’s future vision and possibilities, reducing immediate market pressures and fostering sustainable development.

Lastly, it significantly reduces costs. The expenses associated with independent subsidiary listings, including initial listing fees and ongoing regulatory compliance, can be substantial. By bypassing these costs, companies can reinvest resources into their core businesses, maximizing efficiency and promoting growth. This strategic approach demonstrates the tangible benefits of a unified corporate structure over fragmented listings.

Why the Difference Between Domestic and Overseas Companies?

The primary reason Korean companies opt to list subsidiaries separately is to secure capital. Industries requiring large-scale investments often struggle to raise sufficient funds through the parent company alone. In contrast, global giants like Apple and Alphabet already possess substantial capital and utilize internal resources or large-scale bond issuances for funding.

Korean companies also use subsidiary listings to manage complex governance structures and defend management control. However, such practices risk undermining market trust and exacerbating value distortion between parent and subsidiary companies.

It’s important to note that the absence of subsidiary listings among overseas companies is not due to legal restrictions. In the U.S., there are no explicit legal limitations on the listing of subsidiaries. Instead, the decision is left to the discretion of the company based on its management strategy and capital structure.

Apple and Alphabet have chosen not to list their subsidiaries because they believe it is more advantageous for maintaining long-term corporate value and strategic consistency. This decision is not a legal obligation but a management judgment.

The reason major global companies refrain from listing subsidiaries lies in their strategic focus on integrated management of corporate value and long-term growth potential, rather than merely securing capital. The cases of Apple and Alphabet demonstrate how this approach can preemptively mitigate potential side effects of subsidiary listings and provide investors with more reliable corporate models.

Korean companies, too, should take cues from these global examples to address the structural issues of dual listing and establish more transparent and trustworthy governance structures.

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