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Article

The Influence of Ownership Concentration on Sustainable Merger and Acquisition Performance: Navigating Principal Conflicts in the Korean Market

1
Business School, Korea University, Seoul 02841, Republic of Korea
2
College of Business Administration, Inha University, Incheon 22212, Republic of Korea
3
College of Business, Gachon University, Seongnam-si 13120, Republic of Korea
*
Authors to whom correspondence should be addressed.
Sustainability 2024, 16(12), 4985; https://doi.org/10.3390/su16124985
Submission received: 11 May 2024 / Revised: 6 June 2024 / Accepted: 8 June 2024 / Published: 11 June 2024
(This article belongs to the Special Issue Corporate Governance, Social Responsibility and Green Innovation)

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.
Keywords: ownership concentration; mergers and acquisitions (M&As); principal–principal conflict (PP conflict); corporate governance; cash payments ownership concentration; mergers and acquisitions (M&As); principal–principal conflict (PP conflict); corporate governance; cash payments

Share and Cite

MDPI and ACS Style

Kim, S.; Jung, J.-y.; Cho, S.-w. The Influence of Ownership Concentration on Sustainable Merger and Acquisition Performance: Navigating Principal Conflicts in the Korean Market. Sustainability 2024, 16, 4985. https://doi.org/10.3390/su16124985

AMA Style

Kim S, Jung J-y, Cho S-w. The Influence of Ownership Concentration on Sustainable Merger and Acquisition Performance: Navigating Principal Conflicts in the Korean Market. Sustainability. 2024; 16(12):4985. https://doi.org/10.3390/su16124985

Chicago/Turabian Style

Kim, Seonhyeon, Jin-young Jung, and Sung-woo Cho. 2024. "The Influence of Ownership Concentration on Sustainable Merger and Acquisition Performance: Navigating Principal Conflicts in the Korean Market" Sustainability 16, no. 12: 4985. https://doi.org/10.3390/su16124985

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