This study explores how director share collateralization induces agency problems between the controlling shareholders and the minority shareholders. This study also examines if the effect of directors' real ownership defined as their nominal ownership subtracting their share collateralization on firm performance dominates that of nominal ownership for firms with high director share collateralization. Our empirical results show that director share collateralization exaggerates the deviation between cash flow rights and share controlling rights. Firm credit risk increases and supervisor independency decreases with director share collateralization. Finally, for firms with high director share collateralization, directors' real ownership instead of the nominal ownership is a suitable measure for the monitoring power from directors and supervisors.