IDEAS home Printed from https://ideas.repec.org/a/taf/apfiec/v17y2007i10p785-804.html
   My bibliography  Save this article

The impact of family ownership and dual class shares on takeover risk

Author

Listed:
  • M. Holmen
  • E. Nivorozhkin

Abstract

In this paper the relation between the use of dual class shares and the risk of takeovers is explored. The results stress the need to control for the identity of the controlling owner in studies of corporate control and firm performance. For family controlled firms, it is found that both the hazard rate of takeover and firm market value decline with the wedge between the families' voting rights and cash flow rights. It is concluded that due to non-transferable private benefits of control in family firms, dual class shares reduce the likelihood that the family will accept the terms of value enhancing takeovers and this translates into lower firm value.

Suggested Citation

  • M. Holmen & E. Nivorozhkin, 2007. "The impact of family ownership and dual class shares on takeover risk," Applied Financial Economics, Taylor & Francis Journals, vol. 17(10), pages 785-804.
    • Handle: RePEc:taf:apfiec:v:17:y:2007:i:10:p:785-804
    DOI: 10.1080/09603100500461694
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/09603100500461694
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/09603100500461694?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Barca, Fabrizio & Becht, Marco (ed.), 2001. "The Control of Corporate Europe," OUP Catalogue, Oxford University Press, number 9780199247424.
    2. Marco Becht & Fabrizio Barca, 2001. "The control of corporate Europe," ULB Institutional Repository 2013/13302, ULB -- Universite Libre de Bruxelles.
    3. Marco Becht & Colin Mayer, 2002. "Corporate control in Europe," Revue d'économie politique, Dalloz, vol. 112(4), pages 471-498.
    4. Kristian Rydqvist, 1993. "The Division of Takeover Gains in Sweden," CEPR Financial Markets Paper 0031, European Science Foundation Network in Financial Markets, c/o C.E.P.R, 33 Great Sutton Street, London EC1V 0DX..
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Caprio, Lorenzo & Croci, Ettore & Del Giudice, Alfonso, 2011. "Ownership structure, family control, and acquisition decisions," Journal of Corporate Finance, Elsevier, vol. 17(5), pages 1636-1657.
    2. Isabel Feito-Ruiz & Clara Cardone-Riportella & Susana Menéndez-Requejo, 2016. "Reverse takeover: the moderating role of family ownership," Applied Economics, Taylor & Francis Journals, vol. 48(42), pages 4051-4065, September.
    3. Hyun A. Hong & Jeong‐Bon Kim & Michael Welker, 2017. "Divergence of Cash Flow and Voting Rights, Opacity, and Stock Price Crash Risk: International Evidence," Journal of Accounting Research, Wiley Blackwell, vol. 55(5), pages 1167-1212, December.
    4. Markus Schmid, 2009. "Ownership structure and the separation of voting and cash flow rights-evidence from Switzerland," Applied Financial Economics, Taylor & Francis Journals, vol. 19(18), pages 1453-1476.
    5. Ting Li & Nataliya Zaiats, 2018. "Corporate governance and firm value at dual class firms," Review of Financial Economics, John Wiley & Sons, vol. 36(1), pages 47-71, January.
    6. Ly, Kim Cuong & Liu, Hong & Opong, Kwaku, 2017. "Who acquires whom among stand-alone commercial banks and bank holding company affiliates?," International Review of Financial Analysis, Elsevier, vol. 54(C), pages 144-158.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chilosi, Alberto & Damiani, Mirella, 2007. "Stakeholders vs. shareholders in corporate governance," MPRA Paper 2334, University Library of Munich, Germany.
    2. Helen Callaghan, 2015. "Something left to lose? Network preservation as a motive for protectionist responses to foreign takeovers," Review of International Political Economy, Taylor & Francis Journals, vol. 22(2), pages 391-418, April.
    3. Goergen, Marc & Renneboog, Luc & Correia da Silva, Luis, 2005. "When do German firms change their dividends?," Journal of Corporate Finance, Elsevier, vol. 11(1-2), pages 375-399, March.
    4. Anna Maria Biscotti & Eugenio D’Amico, 2019. "Does Equity Market Differently Perceive IC Management and Disclosure Behaviours?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(2), pages 756-775, June.
    5. Ettore Croci, 2007. "Corporate Raiders, Performance and Governance in Europe," European Financial Management, European Financial Management Association, vol. 13(5), pages 949-978, November.
    6. Marc Goergen & Luc Renneboog, 2004. "Shareholder Wealth Effects of European Domestic and Cross‐border Takeover Bids," European Financial Management, European Financial Management Association, vol. 10(1), pages 9-45, March.
    7. Randall Morck & Lloyd Steier, 2005. "The Global History of Corporate Governance: An Introduction," NBER Chapters, in: A History of Corporate Governance around the World: Family Business Groups to Professional Managers, pages 1-64, National Bureau of Economic Research, Inc.
    8. Tsjalle van der Burg & Aloys Prinz, 2010. "Empowering Firm Owners by Separating Voting from Buying and Selling Shares," Review of Social Economy, Taylor & Francis Journals, vol. 68(1), pages 69-91.
    9. Oxelheim, Lars & Randoy, Trond, 2003. "The impact of foreign board membership on firm value," Journal of Banking & Finance, Elsevier, vol. 27(12), pages 2369-2392, December.
    10. Richard Hofler & Julie Ann Elston & Junsoo Lee, 2004. "Dividend Policy and Institutional Ownership: Empirical Evidence using a Propensity Score Matching Estimator," Papers on Entrepreneurship, Growth and Public Policy 2004-27, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
    11. T. Biebuyck & Ariane Chapelle & Ariane Szafarz, 2002. "Les leviers de contrôle des actionnaires majoritaires," Working Papers CEB 03-001.RS, ULB -- Universite Libre de Bruxelles.
    12. Peter Cziraki & Luc Renneboog & Peter G. Szilagyi, 2010. "Shareholder Activism through Proxy Proposals: The European Perspective," European Financial Management, European Financial Management Association, vol. 16(5), pages 738-777, November.
    13. Luis H. Gutiérrez & Carlos Pombo, 2005. "Corporate Valuation and Governance: Evidence from Colombia," Research Department Publications 3216, Inter-American Development Bank, Research Department.
    14. Anderson, Ronald W. & Hamadi, Malika, 2016. "Cash holding and control-oriented finance," LSE Research Online Documents on Economics 68339, London School of Economics and Political Science, LSE Library.
    15. Gutierrez, Luis H. & Pombo, Carlos & Taborda, Rodrigo, 2008. "Ownership and control in Colombian corporations," The Quarterly Review of Economics and Finance, Elsevier, vol. 48(1), pages 22-47, February.
    16. Sergei Guriev & Andrei Rachinsky, 2004. "Ownership concentration in Russian industry," Working Papers w0045, Center for Economic and Financial Research (CEFIR).
    17. Pombo, Carlos & Taborda, Rodrigo, 2017. "Stock liquidity and second blockholder as drivers of corporate value: Evidence from Latin America," International Review of Economics & Finance, Elsevier, vol. 51(C), pages 214-234.
    18. Martynova, M. & Renneboog, L.D.R., 2006. "The Performance of the European Market for Corporate Control : Evidence from the 5th Takeover Wave," Other publications TiSEM af864e61-b989-415e-ba58-7, Tilburg University, School of Economics and Management.
    19. Susan Perkins & Randall Morck & Bernard Yeung, 2008. "Innocents Abroad: The Hazards of International Joint Ventures with Pyramidal Group Firms," NBER Working Papers 13914, National Bureau of Economic Research, Inc.
    20. repec:zbw:iamost:254051 is not listed on IDEAS
    21. Andres, Christian & Betzer, André & Goergen, Marc, 2011. "Dividend policy, corporate control and tax clienteles: The case of Germany," CFS Working Paper Series 2011/16, Center for Financial Studies (CFS).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:apfiec:v:17:y:2007:i:10:p:785-804. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAFE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.