The effect of a target ownership structure on the takeover premium in owner-manager dominant acquisitions : evidence from Korean cases

This paper examines how the distribution of target ownership is related with takeover premium in owner-manager dominant acquisitions, in which a firm is managed by managers and directors nominated and directed closely by controlling shareholders. We find that there exists the agency problem between owner-managers and non-controlling shareholders. To resolve the agency problem, it is found that the presence of institutional shareholding could be effective. While the bidder holding of target shares before a bid or toehold affects target's acquisition payoffs, the bidder's chaebol effect is inconclusive