This paper investigates empirically the relation between the corporate value and the structure of equity ownership for a sample of 127 firms for 1986 and 162 firms for 1988 in listed firms of Korea. We find a quadratic relation between Tobin's Q and the fraction of common stock owned by corporate insiders. The curve slopes downward until insider ownership reaches approximately 35% and then slopes upward. Contrarily, we find no significant corelation between Tobin's Q and the presence of a block stockholder or the fraction of equity owned by blockholders, and we find no significant correlation between Tobin's Q and the presence of a institutional investor or the fraction of equity owned by institutional investors. In conculusion, the results are consistent with the argument that corporate value is a function of equity ownership structure.
