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Family Control of Firms and Industries

Financial Management, Forthcoming

60 Pages Posted: 25 Mar 2008 Last revised: 21 Dec 2011

Belen Villalonga

New York University (NYU) - Leonard N. Stern School of Business

Raphael ('Raffi") H. Amit

The Wharton School UPENN

Date Written: December 2009

Abstract

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

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

Belen Villalonga (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

40 West 4th Street
New York, NY NY 10012
United States

Raphael H. Amit

The Wharton School UPENN ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104-6370
United States
215 898 7731 (Phone)

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