The purpose of this paper is to examine the relationship power distribution among several blockholders (contestability) and firm performance. We use a sample of 646 firms listed in the security markets of Korea from 2005 to 2007. Using different measures of contestability, we verify advance research literature by examining that, when power dispersion among several blockholders (contestability) increases, firm performance is enhanced. The results show that, when the possibility of a controlling coalition being formed among several blocks increases, the corporate value decreases. We also find that this relationship is even more significant in KOSDAQ. However, the smaller the competition of voting rights among blockholders, the higher the corporate performance in KOSPI. The reason for this seems to be that the two markets are different in terms of ownership and governance. This suggests that the effects of contestability among blockholders on firm performance depend on the type of the stock market. The results of this study expand the existing governance literature by analyzing the relationship between contestability among blockholders and firm performance in emerging markets such as Korea. Our findings contribute to policymakers and investors who are interested in the relationship between contestability of control and firm performance in the Korea stock market.

Abstract
1. Introduction
2. Prior Literature and Hypotheses
3. Data Sources and Variables
4. Methodology
5. Results
    5.1. Descriptive and Correlation analysis
    5.2. Analysis Results
    5.3. Additional results: KOSPI vs. KOSDAQ
6. Conclusions
References

• Hung Sik KIM(College of Management and Economics, Dongguk University Gyeongju Campus, South Korea.)
• Kyung-Shick CHO(College of Management and Economics, Dongguk University Gyeongju Campus, South Korea) Corresponding Author