Financial Management, Forthcoming
60 Pages Posted: 25 Mar 2008 Last revised: 21 Dec 2011
Date Written: December 2009
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.
Keywords: Family firms, ownership, control, dual-class stock, corporate governance
JEL Classification: G32, G3
Suggested Citation: Suggested Citation
Villalonga, Belen and Amit, Raphael ('Raffi") H., Family Control of Firms and Industries (December 2009). Financial Management, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1107466 or http://dx.doi.org/10.2139/ssrn.1107466