[Edaily Reporter kyoungeun kim · Professor Jeong Do-jin, Chung-Ang University] Hanwha Corp. posted a consolidated net income of 1.9916 trillion won in 2025. At first glance, this appears to be a profit nearing 2 trillion won. However, the net income actually attributable to Hanwha Corp. shareholders amounted to only 372.5 billion won. Of every 100 won in consolidated net income, only 18.7 won went to the controlling parent company’s shareholders, while the remaining 81.3 won went to non-controlling shareholders, such as minority shareholders of subsidiaries.
This is an example illustrating that consolidated financial results do not necessarily reflect the performance of the parent company’s shareholders. Consolidated financial statements are prepared by treating the parent company and its subsidiaries as a single economic entity. If the parent company controls a subsidiary, the subsidiary’s revenue, expenses, and operating profit are, in principle, reflected in full—even if the parent company’s ownership stake is less than 50 percent. The shares attributable to the parent company’s shareholders and those attributable to non-controlling interests are derived from net income and equity.
Consolidated operating profit is a useful indicator of the actual operating performance of the entire corporate group. However, some point out that interpreting this as performance attributable to the controlling shareholders or making a simple comparison with the parent company’s market capitalization can lead to misinterpretations.
◇Reported 13.2 billion in profit, but controlling shareholders’ share was only 90 million
On the 1st, E-Daily analyzed the consolidated net income and net income attributable to controlling shareholders of KOSPI and KOSDAQ-listed companies based on their 2025 business reports. Among the 854 companies analyzed (354 KOSPI companies and 500 KOSDAQ companies), the average proportion of net income attributable to controlling shareholders was 88.1% for KOSPI companies and 91.9% for KOSDAQ companies. This means that, on average, 11.9 won and 8.1 won out of every 100 won of consolidated net income, respectively, go to non-controlling shareholders rather than the parent company’s shareholders.
The attributable-to-controlling-shareholders ratio is the proportion of consolidated net income attributable to the owners of the controlling entity. The analysis excluded companies reporting a net loss and was limited to those with positive consolidated net income and net income attributable to both controlling and non-controlling shareholders of 0 or more. Notably, on the KOSPI, 83 companies—23.4% of those analyzed—had an attributable-to-controlling-shareholders ratio of less than 80%. On the KOSDAQ, 70 companies—14.0% of the total—fell into this category.
The number of companies where less than half of consolidated net income went to parent company shareholders reached 23 (6.5%) on the KOSPI and 24 (4.8%) on the KOSDAQ.
Looking at individual companies, HD HYUNDAI reported net income attributable to controlling shareholders of 962.7 billion won out of a consolidated net income of 3.6755 trillion won, resulting in a low attribution rate of 26.2%. At DAOU DATA CORP., out of a consolidated net income of 1.1997 trillion won, net income attributable to controlling shareholders was 218.8 billion won, amounting to a mere 18.2%. DREAMTECH, an electronic components manufacturer, had a net income attributable to controlling shareholders of just 90 million won out of a consolidated net income of 13.25 billion won, resulting in an attribution rate of 0.7%—the lowest among the companies surveyed.
Of course, a low attribution rate does not necessarily mean that accounting treatments were incorrect or that shareholder value was compromised. This is a normal result of consolidated accounting that can occur when a company has many joint ventures or subsidiaries controlled through low equity stakes. Furthermore, since the losses and liabilities of subsidiaries operating at a deficit are fully reflected in the consolidated financial statements, consolidation is not always a mechanism designed to make performance appear better than it is.
The problem arises when figures on a consolidated basis are directly equated with the value of the parent company’s stock, and particular caution is required in the case of companies with low consolidation ratios.
Professor Jeong Do-jin of the Department of Business Administration at Chung-Ang University noted, “Consolidated financial results, which show the revenue and operating profit of the entire corporate group, are useful for assessing business scale and management risk,” but added, “If one simply compares the parent company’s market capitalization with consolidated revenue or operating profit, there is a risk of interpreting the performance attributed to minority shareholders of subsidiaries as value for the parent company’s shareholders.”

◇Why Did the Bubble Burst After LG Corp.’s Asset Spin-off?
The issue of a mismatch between the scope of consolidated financial statements and the economic interests of the parent company’s shareholders emerges as a practical concern in cases where a subsidiary is listed following an asset spin-off. After a spin-off, the subsidiary remains within the parent company’s consolidated scope and continues to be reflected in its financial results. However, ordinary shareholders of the parent company rarely have the opportunity to directly hold or dispose of the subsidiary’s shares to realize the growth value of the core business. If the subsidiary is relisted after the spin-off, the economic value enjoyed by ordinary shareholders may diminish due to a net asset value (NAV) discount—where the value of the listed subsidiary’s equity is not fully reflected in the parent company’s market capitalization—as well as the potential transfer of the subsidiary’s profits and cash.
According to the paper “Listing of a Newly Established Subsidiary Following an Asset Spin-off: Focusing on the Case of LG Energy Solution,” published in the *Accounting Journal*, LGCHEM,LTD’s stock price fell immediately after the announcement of the asset spin-off, and the parent company’s price-to-book ratio (PBR) dropped significantly after the subsidiary’s listing. In this paper, Professor Kwon Soo-young of the College of Business Administration at Korea University stated, “When a subsidiary goes public following an asset spin-off, even though the relevant business continues to be reflected in the parent company’s consolidated financial statements, existing common shareholders lose direct ownership and control over the growth business,” adding, “Maintaining the scope of consolidation does not necessarily mean preserving value for common shareholders.”
Recently, the opposite scenario has also emerged. LG Energy Solution returned to an operating profit in the second quarter of this year, reflecting the benefits of U.S. production tax credits; however, excluding this factor, it posted an operating loss of 127.7 billion won. Since LGCHEM,LTD holds an 81.8% stake in LG Energy Solution, the subsidiary’s losses and the debt burden resulting from large-scale investments are fully reflected in the parent company’s consolidated operating profit and financial metrics. The extent to which positive developments at a subsidiary are reflected in the parent company’s stock price may be limited. However, losses and financial burdens resulting from a slump in the industry are fully reflected in the parent company’s performance through consolidated results, thereby acting as negative factors for the stock price.
Professor Jeong Do-jin emphasized, “In valuing the parent company’s stock, net income attributable to the controlling owners and equity should be prioritized,” adding, “It is necessary to adjust the valuation scope by taking into account non-controlling interests and restrictions on cash transfers.”