This paper investigates the effect of concentrated ownership of KOSPI (Korea Composite Stock Price Index) firms on firm performance, performance volatility, and firm value considering nonlinearity. Recent Korean studies suggest that concentrated ownership of KOSPI firms are nonlinearly associated with firm value. However, there is no noteworthy research on the relation between the effect of controlling shareholders of KOSPI firms and firm performance and performance volatility. This study offers such empirical evidence using a sample of KOSPI firms from 2005 to 2007. Based on a sample of 1,227 KOSPI firms, this study finds that (1) the KOSPI firms’ concentrated ownership has a significant impact on firm performance and performance volatility, and (2) the relation among firms’ concentrated ownership, firm performance, and performance volatility is nonlinear, inverted U shape, and U shape respectively. In addition, concentrated ownership is also nonlinearly related with firm value. After controlling for the endogeneity between variables, the nonlinear effects of concentrated ownership on firm performance, performance volatility, and firm value are still robust.
Abstract
Ⅰ. Introduction
Ⅱ. Research Hypotheses
Ⅲ. Research Models
Ⅳ. Empirical Results
Ⅴ. Conclusion
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