This paper investigates the relationship between management ownership and market valuation, as mearsured by Tobin's Q, for a sample of 143 listed firms in Korea for 1988. Blockholder ownership is used for the proxy of management ownership. To capture the possible presence of both the convergence-of-interest and entrenchment effects, we estimate a variety of piecewise linear regression. The results seem to suggest a positive relation between ownership and Q in the 0% to 15% blockholder ownership range, a negative and less pronounced relation in the 15% to 35% range, and perhaps a further positive relation beyond 35%. Additionally, we find significant correlation between Tobin's Q and the presence of a institutional investors. These results are consistent with the strategic-alignment hypothesis, proposed by Pound(1988), which predicts a negative relation between corporate value and institutional share ownership.
