The Influence of Ownership Concentration on Sustainable Merger and Acquisition Performance: Navigating Principal Conflicts in the Korean Marketopen access
- Authors
- Kim, Seonhyeon; Jung, Jin-young; Cho, Sung-woo
- Issue Date
- Jun-2024
- Publisher
- MDPI
- Keywords
- ownership concentration; mergers and acquisitions (M&As); principal-principal conflict (PP conflict); corporate governance; cash payments
- Citation
- SUSTAINABILITY, v.16, no.12
- Journal Title
- SUSTAINABILITY
- Volume
- 16
- Number
- 12
- URI
- https://scholarworks.bwise.kr/gachon/handle/2020.sw.gachon/91996
- DOI
- 10.3390/su16124985
- ISSN
- 2071-1050
2071-1050
- Abstract
- This study examines the dynamics of owner behavior, agency costs, and M&A outcomes in the Korean market, aiming to explore how ownership concentration influences conflicts among principal groups and impacts M&A performance. Using empirical data from Korean M&A transactions, we analyze the effects of ownership concentration and cash payment preferences on firm value. Our findings indicate that while ownership concentration can reduce owner-manager conflicts, it heightens principal-principal conflicts, especially with moderate ownership, weak governance, or financial distress. Control-focused owners prefer cash payments, which can lower acquiring firm announcement returns under high ownership concentrations. Effective governance is crucial for fostering responsible decision-making and sustainable practices in M&As. This research underscores the importance of balanced ownership structures and robust governance mechanisms in mitigating agency conflicts and promoting sustainable M&A performance.
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