This study examines the impact of concentrated ownership on information asymmetry of Korean listed firms and suggests several alternative mechanisms to mitigate the negative effect of such ownership. Ownership structures of Korean firms are likely to be highly concentrated, and controlling shareholders have actively participated in the management process. Thus, information asymmetry between controlling and minority shareholders can be particularly serious when there are few mechanisms to protect minority shareholders and control the discretionary power of controlling shareholders. Private information of controlling shareholders may cause higher adverse selection costs in trading activities on firms’ securities, and thus higher cost of external financing. Empirical evidence shows that information asymmetry is positively associated with concentrated ownership, and also shows that the positive relationship between concentrated ownership and Probability of Information-Based Trading (PIN) is primarily driven by the increase in the relative amount of information-based trading. Furthermore, concentrated ownership is negatively associated with the subsequent new information event, indicating that a controlling shareholder protects his proprietary information flow to the public. This study also finds that analyst following can reduce information asymmetry as an alternative information dissemination mechanism, and that institutional investors and internal corporate governance systems can not help alleviate the substantial negative effects of concentrated ownership.