Using firm level data from Korea, we examine the impact of ownership concentration on the post-M&A performance of firms. This study focuses on the owners who value their control. These owners prefer cash payments for M&A transactions because the stock transactions can change the amount of control they have over corporate. This behavior of owners leads to principal-principal (PP) conflicts, which can allow a controlling shareholder to extract private benefits of control by forcing decisions that expropriate the minority shareholder wealth. The effect of PP conflicts is strong when firms are financially constrained, poorly governed, and/or have higher information asymmetry. Our analysis has implications for both the M&A literature, which emphasizes the role of agency conflict, and the corporate governance literature, especially in the context of emerging market economies. A cautious interpretation of our results suggests that the owners of the firms with weak governance, financial constraint, and/or high information asymmetry may make decisions that undermine the minority shareholder value for their private benefits. 

Keywords: Ownership concentration; Agency problem; Merger and acquisitions; Payment method; Corporate governance mechanisms; Emerging market; Information asymmetry​