LG Group is a South Korean multinational conglomerate founded and managed by Koo In-hwoi and his family. LG Group makes electronics, appliances, display, chemicals, and telecommunications.

In 1998, LG Securities, one of the LG Group's profitable subsidiary, acquired LG Merchant Bank, one of the LG Group's unprofitable subsidiary. In this transaction, the controlling shareholders of LG Group were able to transfer capital from LG Merchant Bank via LG Securities because they owned only 18% of the equity in LG Securities and 60% of the equity of LG Merchant Bank. By overpaying $1 for the acquisition they would have lost only 18 cents through LG Securities but would have gained 60 cents through LG Merchant Bank, while the minority shareholders in LG Securities would have lost 82 cents.

Based on the information, (1) compare and contrast the ownership structures of LG Group and a U.S. public company of your choice;

(2) explain why one ownership structure is common in South Korea, and the other ownership structure is common in the U.S.;

(3) identify the problems associated with the ownership structures of LG Group and the U.S. public company of your choice;

(4) discuss a major internal corporate governance mechanism and a major external corporate governance mechanism to correct the problems.