Family Firms and the Stock Market Performance of Acquisitions and Divestitures

40 Pages Posted: 3 Jan 2019

See all articles by Raphael ('Raffi") H. Amit

Raphael ('Raffi") H. Amit

The Wharton School UPENN

Emilie Feldman

University of Pennsylvania - The Wharton School

Belen Villalonga

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

Date Written: December 8, 2018

Abstract

This paper explores the stock market performance of acquisitions and divestitures where both, one, or neither of the companies in the transaction are family firms. We find that acquirer shareholder returns are highest when family firms buy businesses from non-family firm divesters, especially when family CEO acquirers buy businesses from non-family CEO divesters. Additionally, divester shareholder returns are highest when family firms sell businesses to non-family firm acquirers, especially when family CEO divesters sell businesses to non-family CEO acquirers. These findings reveal that it is important to consider the characteristics of both the acquiring and divesting firms when analyzing acquisition and divestiture performance, and that the expected gains to family firm acquisitions and divestitures are driven by transactions in which the counterparties are non-family firms.

Keywords: acquisitions, divestitures, corporate strategy, shareholder returns, family firms

JEL Classification: G30, M21

Suggested Citation

Amit, Raphael H. and Feldman, Emilie and Villalonga, Belen, Family Firms and the Stock Market Performance of Acquisitions and Divestitures (December 8, 2018). Available at SSRN: https://ssrn.com/abstract=3303061 or http://dx.doi.org/10.2139/ssrn.3303061

Raphael H. Amit

The Wharton School UPENN ( email )

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

Emilie Feldman (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3733 Spruce Street
Philadelphia, PA 19104-6374
United States

Belen Villalonga

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

40 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

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