Abstract
In Korea, there is a large disparity between voting and cash flow rights (control–ownership disparity). Using firm‐level data from Korea for the 2004–2009 period, the present study examines whether control–ownership disparity influenced firm performance. Specifically, the study analyzes whether the effects of control–ownership disparity on firm performance vary according to the type of firm (publicly traded vs private firms) and to the major shareholder's ownership stake (greater than 50 percent vs less than or equal to 50 percent). According to the results, the negative effect of control–ownership disparity on firm performance was weaker for publicly traded firms, and control–ownership disparity had a negative effect on firm performance when the major shareholder's ownership stake exceeded 50 percent.
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