Controlling shareholders' value, long-run firm value and short-term performance

Hyung Cheol Kang, Robert M. Anderson, Kyong Shik Eom, Sang Koo Kang

Research output: Contribution to journalArticlepeer-review

27 Scopus citations


We propose a new determinant of firm value within a business group: controlling shareholders' value (CSV), the value of controlling shareholders' stake in an affiliate divided by their stake in all affiliates. We posit that controlling shareholders focus attention on the high-CSV affiliates. Using data on Korean family-controlled business groups, we find that CSV has greater explanatory power for firm performance than traditional cash flow rights (CFR). We also find that, among affiliates with non-family CEOs, higher CSV is associated with higher Tobin's Q and lower EBITDA, indicating that controlling shareholders and non-family CEO have successfully addressed their principal-agent problem.

Original languageEnglish
Pages (from-to)340-353
Number of pages14
JournalJournal of Corporate Finance
StatePublished - 1 Apr 2017


  • Business group
  • Cash flow rights (CFR)
  • Chaebol
  • Controlling shareholders' value (CSV)
  • Limited attention
  • Ownership structure


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