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Ownership Concentration, Family Control and Performance of Firms

Author

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  • Malika Hamadi

    (Luxembourg School of Finance, University of Luxembourg)

Abstract

This paper explores the relationship between firm performance, measured by Tobin's Q and very powerful controlling shareholders in a sample of Belgian listed firms. The paper shows that overall the largest shareholders have a negative effect on firm performance. Nevertheless, in family firms the effect of large controlling shareholders on performance is positive except when they are organized in voting blocks. Firms related to coordination centers display higher performance associated with large shareholders. The paper shows that the presence of a second shareholder in the firm has no significant effect.

Suggested Citation

  • Malika Hamadi, 2010. "Ownership Concentration, Family Control and Performance of Firms," LSF Research Working Paper Series 10-03, Luxembourg School of Finance, University of Luxembourg.
    • Handle: RePEc:crf:wpaper:10-03
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    File URL: http://www.lsf.lu/eng/content/download/1525/7537/file/10-03.pdf
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    References listed on IDEAS

    as
    1. Morck, Randall & Shleifer, Andrei & Vishny, Robert W., 1988. "Management ownership and market valuation," Scholarly Articles 29407535, Harvard University Department of Economics.
    2. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    3. McConnell, John J. & Servaes, Henri, 1990. "Additional evidence on equity ownership and corporate value," Journal of Financial Economics, Elsevier, vol. 27(2), pages 595-612, October.
    4. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, April.
    5. Morck, Randall & Shleifer, Andrei & Vishny, Robert W., 1988. "Management ownership and market valuation : An empirical analysis," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 293-315, January.
    6. Lang, Larry H. P. & Stulz, ReneM. & Walkling, Ralph A., 1989. "Managerial performance, Tobin's Q, and the gains from successful tender offers," Journal of Financial Economics, Elsevier, vol. 24(1), pages 137-154, September.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Chung, Won Young & Lee, Jae-Gil & Seo, Jaeun & Kim, Jaeyun & Jo, Yuri & Lee, Daeho, 2022. "From whom should ICT startups raise capital? The effect of ownership structure on efficiency in new ICT startups," International Review of Economics & Finance, Elsevier, vol. 82(C), pages 82-91.
    2. Antonio Pedro Soares Pinto & Mario Gomes Augusto, 2014. "Are There Non-linear Effects of Banking Relationships and Ownership Concentration on Operational Performance? Empirical Evidence from Portuguese SMEs Using Cross-section Analysis and Panel Data," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 5(4), pages 67-84, October.
    3. Petra Koudelkova & Wadim Strielkowski & Denisa Hejlova, 2015. "Corruption and System Change in the Czech Republic: Firm-level Evidence," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 1, pages 25-46, March.
    4. Basco, Rodrigo, 2013. "The family's effect on family firm performance: A model testing the demographic and essence approaches," Journal of Family Business Strategy, Elsevier, vol. 4(1), pages 42-66.
    5. Wenig, Thilo, 2021. "Performance of German Family Firms During the Global Financial Crisis," Junior Management Science (JUMS), Junior Management Science e. V., vol. 6(2), pages 237-278.
    6. Barros, Ismael & Hernangómez, Juan & Martin-Cruz, Natalia, 2016. "A theoretical model of strategic management of family firms. A dynamic capabilities approach," Journal of Family Business Strategy, Elsevier, vol. 7(3), pages 149-159.
    7. Poutziouris, Panikkos & Savva, Christos S. & Hadjielias, Elias, 2015. "Family involvement and firm performance: Evidence from UK listed firms," Journal of Family Business Strategy, Elsevier, vol. 6(1), pages 14-32.
    8. Mamduh Hanafi & Fitri Santi & Muazaroh, 2013. "The Impact of Ownership Concentration, Commissioners on Bank Risk and Profitability: Evidence from Indonesia," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 3(2), pages 183-202, December.
    9. Garcia-Castro, Roberto & Casasola, Mª José, 2011. "A set-theoretic analysis of the components of family involvement in publicly listed and major unlisted firms," Journal of Family Business Strategy, Elsevier, vol. 2(1), pages 15-25, March.
    10. Lan Thi Mai Nguyen & Trang Khanh Tran & Cameron Truong, 2024. "Family ownership and speed of adjustment towards targeted capital structures: A study of ASEAN firms," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(1), pages 445-474, March.

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    More about this item

    Keywords

    Ownership concentration; family firms; voting blocks; Tobin's q;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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