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Keywords = principal–principal conflict (PP conflict)

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20 pages, 494 KiB  
Article
The Influence of Ownership Concentration on Sustainable Merger and Acquisition Performance: Navigating Principal Conflicts in the Korean Market
by Seonhyeon Kim, Jin-young Jung and Sung-woo Cho
Sustainability 2024, 16(12), 4985; https://doi.org/10.3390/su16124985 - 11 Jun 2024
Cited by 1 | Viewed by 1915
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 [...] Read more.
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. Full article
(This article belongs to the Special Issue Corporate Governance, Social Responsibility and Green Innovation)
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15 pages, 316 KiB  
Article
Small Family Businesses: Innovation, Risk and Value
by Samir Harith and Ruth Helen Samujh
J. Risk Financial Manag. 2020, 13(10), 240; https://doi.org/10.3390/jrfm13100240 - 14 Oct 2020
Cited by 5 | Viewed by 5332
Abstract
This article reviews the literature and applies principal-to-principal (PP) conflict theory to small family based businesses. The lack of accurate measurement and communication of risk leading to issues with innovation, is the primary cause of PP agency costs. Careful analysis of the risk [...] Read more.
This article reviews the literature and applies principal-to-principal (PP) conflict theory to small family based businesses. The lack of accurate measurement and communication of risk leading to issues with innovation, is the primary cause of PP agency costs. Careful analysis of the risk levels reflected in the cost of debt and opportunity cost of equity provides a theoretically robust and empirically estimable process for ascertaining the true PP agency cost. Awareness of the constraining governance structures and the suggested method, based on the cost of capital, to assess small business risk can assist SME owners and financiers to SMEs to promote business efficiency and innovation. Full article
(This article belongs to the Special Issue Innovation and SME Finance)
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