The Impacts of Multi-blockholder Contestability and Coalition on the Risk of Korean Companies

Main Article Content

Hung Sik Kim
Kyung-Shick Cho

Abstract

We examine the relationship between multi-blockholder contestability and coalition and firm risk using an unbalanced panel of 646 Korean non-financial firms with 7,582 firm-years from 2010 to 2017 (8 years). For multi-blockholder contestability, we use the second-to-first blockholder contestability index and the second-and third-to-first blockholder contestability index. The Herfindahl-Harshman Index Concentration and Herfindahl-Harshman Index Difference are used for a multi-blockholder coalition. Using different measures of contestability, we show that contestability among multiple blockholders is negatively related to beta. It is also shown that the probability (variance) of forming a dominant coalition among multiple blockholders is negatively related to beta. This suggests that contestability and the probability of forming a dominant coalition among multiple blockholders reduce corporate risk. This study expands on the existing literature on the relationship between corporate risk and ownership. This study shows that the multi-blockholder contestability and coalition may be one factor determining the risk of a company. Our findings will contribute to policymakers and investors who are interested in the relationship between corporate risk and blockholder contestability and dispersion in the Korean stock market.

Article Details

How to Cite
The Impacts of Multi-blockholder Contestability and Coalition on the Risk of Korean Companies. (2022). Asian Academy of Management Journal of Accounting and Finance, 18(2), 1-20. https://doi.org/10.21315/aamjaf2022.18.2.1
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