Executive Summary: Running in the Family (original) (raw)
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The Contest to the Control in European Family Firms: How Other Shareholders Affect Firm Value
Corporate …, 2008
This paper analyses the influence of large shareholders on firm value using a sample of firms from 15 European countries. Specifically, we consider how the existence of a controlling coalition in family-owned firms and the contestability of control of the largest shareholder affect the value of the family-owned firms. We find that increased contestability of the control of the largest shareholder increases the value of family-owned firms. Our results also show that in firms in which the largest shareholder is a family, a second family shareholder reduces firm value. Conversely, an institutional investor as a second shareholder increases firm value. Likewise, better legal protection of shareholders who are not members of the controlling coalition increases the value of family firms.
Journal of Financial Management, Markets and Institutions
In the years following the economic and financial crisis, Italy, where most firms are family-owned, has seen the demise of more companies than any other country. To avoid a similar disaster in the future, it is important to understand which determinants influence firms’ survival. Stemming from financial and family business literature, this paper investigates the role of financial ratios and family corporate governance in predicting family firms’ survival probability. To obtain empirical evidence, it performs a mediating regression analysis using a sample of 273 Italian family firms. The main findings show that family ownership concentration and the presence of a family CEO increase firms’ survival probability, while a high number of family members involved in the firm and the co-presence of more generations hinder it.
Annual Review of Financial Economics, 2015
We review what the financial economics literature has to say about the unique ways in which the following three classic agency problems manifest themselves in family firms: (a) shareholders versus managers, (b) controlling (family) shareholders versus noncontrolling shareholders, and (c) shareholders versus creditors. We also call attention to a fourth agency problem that is unique to family firms: the conflict of interest between family shareholders and the family at large, which can be thought of as the “superprincipal” in a multi-tier agency structure akin to those found in other concentrated ownership structures in which the controlling owner is the state, a bank, a corporation, or other institutions. We then discuss the solutions or corporate governance mechanisms that have been devised to address these problems and what research has taught us about these mechanisms' effectiveness at solving these four conflicts in family firms.
The life cycle of family ownership: international evidence
2010
Abstract We show that in countries with strong investor protection, developed financial markets, and active markets for corporate control, family firms evolve into widely held companies as they age. In countries with weak investor protection, less developed financial markets, and inactive markets for corporate control, family control is very persistent over time.