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Acquisitions of family owned firms: boon or bust?

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  • Kimberly Gleason
  • Anita Pennathur
  • Joan Wiggenhorn

Abstract

Using a hand-collected dataset, we examine the acquisitions of 307 family owned targets for the period 1984–2000 to study the conflicting roles of entrenchment and alignment of interests in these firms. We find that bidders experience the strongest announcement market reaction at the medium levels of family ownership. However, bidder returns are negatively impacted when acquiring a public target family firm, even controlling for the percent owned by the family. We also find that overall firms that acquire family owned targets experience significant large negative returns in the long run. However, the long run results are also sensitive to the ownership structure of the family firm target with medium levels resulting in insignificant returns in the long run. Copyright Springer Science+Business Media, LLC 2014

Suggested Citation

  • Kimberly Gleason & Anita Pennathur & Joan Wiggenhorn, 2014. "Acquisitions of family owned firms: boon or bust?," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 38(2), pages 269-286, April.
    • Handle: RePEc:spr:jecfin:v:38:y:2014:i:2:p:269-286
    DOI: 10.1007/s12197-011-9215-6
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