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Value of Control in Family Firms: Evidence from Mergers and Acquisitions

Author

Listed:
  • Nihat Aktas

    (WHU Otto Beisheim School of Management, Germany)

  • Santo Centineo

    (WHU Otto Beisheim School of Management, Germany)

  • Ettore Croci

    (Universita’ Cattolica del Sacro Cuore, Italy)

Abstract

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.

Suggested Citation

  • Nihat Aktas & Santo Centineo & Ettore Croci, 2016. "Value of Control in Family Firms: Evidence from Mergers and Acquisitions," Multinational Finance Journal, Multinational Finance Journal, vol. 20(2), pages 85-126, June.
    • Handle: RePEc:mfj:journl:v:20:y:2016:i:2:p:85-126
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    Citations

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    Cited by:

    1. Moritz Belling & Ulrich Pidun & Dodo zu Knyphausen-Aufseß, 2021. "Unbundling Strategic Change in Family Firms: the Influence of Familiness on the Strategic Change Process," Schmalenbach Journal of Business Research, Springer, vol. 73(3), pages 381-411, December.
    2. Stefano Mengoli & Federica Pazzaglia & Sandro Sandri, 2020. "Family firms, institutional development and earnings quality: does family status complement or substitute for weak institutions?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 24(1), pages 63-90, March.

    More about this item

    Keywords

    family firms; leverage; control motives; acquisitions;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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