Abstract

http://ssrn.com/abstract=493504
 
 

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Spending Less Time with the Family: The Decline of Family Ownership in the UK


Julian R. Franks


London Business School; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Colin Mayer


University of Oxford - Said Business School; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Stefano Rossi


Krannert School of Management; Centre for Economic Policy Research (CEPR)

January 2004

ECGI - Finance Working Paper No. 35/2004

Abstract:     
Family ownership was rapidly diluted in the twentieth century in Britain. Issuance of equity in the process of acquisitions was the main cause. In the first half of the century, it occurred in the absence of minority investor protection and relied on directors of target firms protecting the interests of shareholders. Families were able to retain control by occupying a disproportionate number of seats on the boards of firms. However, in the absence of large stakes, the rise of hostile takeovers and institutional shareholders made it increasingly difficult for families to maintain control without challenge. Potential targets attempted to protect themselves through dual class shares and strategic share blocks but these were dismantled in response to opposition by institutional shareholders and the London Stock Exchange. The result was a regulated market in corporate control and a capital market that looked very different from its European counterparts. Thus, while acquisitions facilitated the growth of family controlled firms in the first half of the century, they also diluted their ownership and ultimately their control in the second half.

Number of Pages in PDF File: 41

Keywords: Family ownership, control, takeovers

JEL Classification: G32

working papers series


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Date posted: January 26, 2004  

Suggested Citation

Franks, Julian R. and Mayer, Colin and Rossi, Stefano, Spending Less Time with the Family: The Decline of Family Ownership in the UK (January 2004). ECGI - Finance Working Paper No. 35/2004. Available at SSRN: http://ssrn.com/abstract=493504 or http://dx.doi.org/10.2139/ssrn.493504

Contact Information

Julian R. Franks (Contact Author)
London Business School ( email )
Institute of Finance and Accounting
Sussex Place - Regent's Park
London NW1 4SA
United Kingdom
+44 20 7262 5050 x3449 (Phone)
+44 20 7724 3317 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Colin Mayer
University of Oxford - Said Business School ( email )
Park End Street
Oxford, OX1 1HP
Great Britain
+44 1865 288112 (Phone)
+44 1865 288805 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Stefano Rossi
Krannert School of Management ( email )
West Lafayette, IN 47907-1310
United States
Centre for Economic Policy Research (CEPR) ( email )
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
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