Family Control, Stock Price Levels, and Stock Split Activity

40 Pages Posted: 26 May 2016 Last revised: 20 Oct 2018

See all articles by Francois Belot

Francois Belot

Université de Cergy-Pontoise

Timothée Waxin

Léonard de Vinci Pôle Universitaire

Date Written: October 15, 2018


We investigate the impact of family control on both the share price level and the decision to split the firm’s stock. Low stock prices are associated with higher volatility and have been shown to attract more speculative trading, which may force managers to excessively focus on short-term earnings. Moreover, a reduction in the stock price level is often associated with a loss of prestige. We hypothesize that family owners, who are typically long-term investors and are especially concerned about corporate reputation, prefer to set higher stock prices to mitigate short-termism, focus on long-term planning, and reinforce the firm’s prestige. Using a comprehensive sample of firms in the Société des Bourses Françaises (SBF) 120 Index from 1998 to 2016, we find a positive correlation between share prices and family control. Our investigations also indicate that family firms are less likely to conduct price reductions through stock splits. These findings suggest that a high stock price is a distinctive feature of family firms and that family owners have a specific norm in mind with respect to prices.

Keywords: Stock prices, Stock splits, Family control, Long-term orientation, Reputation

JEL Classification: G12, G30, G32

Suggested Citation

Belot, Francois and Waxin, Timothée, Family Control, Stock Price Levels, and Stock Split Activity (October 15, 2018). Available at SSRN: or

Francois Belot (Contact Author)

Université de Cergy-Pontoise ( email )

33 boulevard du Port
Cergy-Pontoise Cedex, 95011
+33 1 34 25 62 33 (Fax)

Timothée Waxin

Léonard de Vinci Pôle Universitaire ( email )


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