Why do Shareholders Value Marriage?

45 Pages Posted: 27 Mar 2008 Last revised: 8 Feb 2009

See all articles by Joseph P. H. Fan

Joseph P. H. Fan

The Chinese University of Hong Kong (CUHK) - School of Accountancy

Yupana Wiwattanakantang

National University of Singapore - Department of Finance

Pramuan Bunkanwanicha

ESCP Business School

Date Written: March 18, 2008

Abstract

This paper shows that marriage can function in a similar way as mergers and acquisitions. To set up alliances that would benefit the firms, a controlling family would encourage their children to marry a person from a politically or economically powerful family. To test this hypothesis, we collect wedding announcements for the offspring of big-business owners in Thailand. The results from the event study show positive abnormal returns when the partner is from a well-connected family. The probit analysis shows that offspring are more likely to choose their partner from a well-connected family when the family's businesses are in the property and construction industries, based on state contracts, more diversified and heavily in debt. Overall, the results suggest that family networks might provide reputation capital, reliable information, and enforce contracts, thus reducing market frictions faced by entrepreneurs in weak institutional environments.

Keywords: family firms, business groups, governance, emerging economies, marriage, networks

JEL Classification: G15, G32, G34, G38, K23, M13

Suggested Citation

Fan, Po Hung Joseph P. H. and Wiwattanakantang, Yupana and Bunkanwanicha, Pramuan, Why do Shareholders Value Marriage? (March 18, 2008). ECGI - Finance Working Paper No. 227/2008, Available at SSRN: https://ssrn.com/abstract=1108642 or http://dx.doi.org/10.2139/ssrn.1108642

Po Hung Joseph P. H. Fan

The Chinese University of Hong Kong (CUHK) - School of Accountancy ( email )

Shatin, N.T.
Hong Kong
(852) 26097839 (Phone)
(852) 26035114 (Fax)

Yupana Wiwattanakantang

National University of Singapore - Department of Finance ( email )

Business School
Mochtar Riady Building #7-44, 15 Kent Ridge Dri
Singapore, 117592
Singapore
65-6516-1912 (Phone)

Pramuan Bunkanwanicha (Contact Author)

ESCP Business School ( email )

79 Avenue de la Republique
Paris, 75011
France

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