Controlling shareholders' value, long-run firm value and short-term performance
Hyung Cheol Kang,
Robert M. Anderson,
Kyong Shik Eom and
Sang Koo Kang
Journal of Corporate Finance, 2017, vol. 43, issue C, 340-353
We propose a new determinant of firm value within a business group: controlling shareholders' value (CSV), the value of controlling shareholders' stake in an affiliate divided by their stake in all affiliates. We posit that controlling shareholders focus attention on the high-CSV affiliates. Using data on Korean family-controlled business groups, we find that CSV has greater explanatory power for firm performance than traditional cash flow rights (CFR). We also find that, among affiliates with non-family CEOs, higher CSV is associated with higher Tobin's Q and lower EBITDA, indicating that controlling shareholders and non-family CEO have successfully addressed their principal-agent problem.
Keywords: Controlling shareholders' value (CSV); Business group; Cash flow rights (CFR); Ownership structure; Chaebol; Limited attention (search for similar items in EconPapers)
JEL-codes: G32 G34 L22 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:43:y:2017:i:c:p:340-353
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