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.

The purpose of this study is to investigate the determinants of blockholder presence in the Korean stock market. This study examines previous theories and studies, points that previous studies did not examine, and proposes two hypotheses. To verify two hypotheses, fundamental data were collected from firms listed on Korea Exchange from 2005 to 2017. As explanatory variables, we use the factors and characteristics of the firms used in the previous studies. Logistic regression analysis was conducted to test the determinants of blockholder presence. We find that firm size is the most distinctive factor determining the presence of blockholder, and firm idiosyncratic risk is the most similar factor determining the existence of each blockholder. Tobin Q shows significant value in family and government, and R&D intensity appears to be a negative related to the presence of blockholder in financial institutions. We also find that the determinant of blockholder presence differs from the mechanisms that govern each individual blockholder type when all blockholders grouped together. This suggests that there is blockholder heterogeneity within Korea listing firms. Our findings contribute to investors and policy makers who interested in the determinants of the presence of blockholder and blockhoder heterogeneity in Korea stock market.