Value of Control in Family Firms: Evidence from Mergers and Acquisitions
42 Pages Posted: 31 Aug 2016
Date Written: August 30, 2016
This article studies European acquisitions in the period 1990-2013 to examine the relationship between family ownership and the propensity to undertake diversifying acquisitions. We show that family firms, especially those highly leveraged, tend to make more cross-industry acquisitions as this allows the owners to effectively diversify their wealth without selling their shares. Our results also indicate that family firms that value control high (i.e., family firms with high leverage) appear not to diversify at the detriment of minority shareholders.
Keywords: family firms; leverage; control motives; acquisitions
JEL Classification: G34
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