Family Control of Firms and Industries
New York University (NYU) - Leonard N. Stern School of Business
Raphael ('Raffi") H. Amit
The Wharton School UPENN
Financial Management, Forthcoming
We test what explains family control of firms and industries and find that the explanation is largely contingent on the identity of families and individual blockholders. Founders and their families are more likely to retain control when doing so gives the firm a competitive advantage, thereby benefiting all shareholders. In contrast, non-founding families and individual blockholders are more likely to retain control when they can appropriate private benefits of control. Families are more likely to maintain control when the efficient scale is small, the need to monitor employees is high, investment horizons are long, and the firm has dual-class stock.
Number of Pages in PDF File: 60
Keywords: Family firms, ownership, control, dual-class stock, corporate governance
JEL Classification: G32, G3
Date posted: March 25, 2008 ; Last revised: December 21, 2011
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