Takeover Premiums and Family Blockholders

2015 ◽  
Vol 29 (2) ◽  
pp. 214-230 ◽  
Author(s):  
Max P. Leitterstorf ◽  
Maximilian M. Wachter
Keyword(s):  
Family Firms ◽  
Agency Model ◽  
Listed Firms ◽  
Empirical Results ◽  
The Impact ◽  
Special Case ◽  
Behavioral Agency

Blockholders impact strategic firm decisions because they are better at monitoring managers than dispersed shareholder groups. Nevertheless, we do not sufficiently understand how preferences of different blockholder types impact strategic firm decisions. We discuss this in the context of takeover premiums offered for publicly listed firms. Prior studies have argued that managers are often tempted to offer excessively high premiums. Consistently, blockholders might better control managers and ensure lower premiums. To better understand the impact of blockholder preferences, we focus on the special case of family firms. Specifically, drawing on the behavioral agency model, we hypothesize that bidders with family blockholders offer lower premiums than bidders with other blockholders or bidders without blockholders. Our empirical results support our hypotheses based on a sample of 149 takeover offers.

CEO pay and family firm heterogeneity: A behavioral agency model perspective

2021 ◽  
pp. 234094442110517
Author(s):  
Carlos Fernández Méndez ◽  
Rubén Arrondo García ◽  
Shams Pathan
Keyword(s):  
Family Firms ◽  
Firm Heterogeneity ◽  
Jel Classification ◽  
Agency Model ◽  
Family Control ◽  
Listed Firms ◽  
Top Executives ◽  
Pay Disparity ◽  
Ceo Pay ◽  
Behavioral Agency

We study the effects of family control on CEO pay from the perspective of behavioral agency model (BAM), with particular focus on family firm’s generational stage and CEO family ties. Using a panel of Australian listed firms, we find that family firms present lower total and variable CEO pay, showing also less pay disparity between the CEO and other top executives. We also find that multi-generational family firms and those run by non-family CEOs offer higher total and variable CEO pay and present high pay disparity. The BAM and family’s aversion to socioemotional wealth loss can explain the effects of family control based on the pursuing of non-financial family goals. The decline of these goals derived from the aging of the firm and the hiring of external CEOs shape family control and should be considered in the design of executive compensation policies and by external parties when assessing their suitability. JEL CLASSIFICATION: G30; G32; G34; G38

scholarly journals Do family firms pay less for external funding?

2021 ◽  
pp. 031289622110182
Author(s):  
Muhammad Jahangir Ali ◽  
Seema Miglani ◽  
Man Dang ◽  
Premkanth Puwanenthiren ◽  
Mazur Mieszko
Keyword(s):  
Family Involvement ◽  
Family Firms ◽  
Jel Classification ◽  
Family Control ◽  
Listed Firms ◽  
Family Enterprises ◽  
The Cost ◽  
And Control ◽  
The Impact

We examine the impact of family control on the cost of raising external funds by family enterprises. Using a sample of Australian publicly listed firms, we find a significantly negative relation between cost of newly raised capital and family control. Moreover, we show that this relationship varies with the quality of corporate governance and the quality of firm’s information environment. Furthermore, we conduct several robustness checks and consistently find that our main results remain unchanged. Overall, our evidence suggests that family firms have easier access to external financing fostered by family involvement in the ownership and control. JEL Classification: G31; G32; M41; M42

CEO Risk-Taking and Socioemotional Wealth: The Behavioral Agency Model, Family Control, and CEO Option Wealth

2017 ◽  
Vol 45 (4) ◽  
pp. 1713-1738 ◽  
Author(s):  
Luis R. Gomez-Mejia ◽  
Ionela Neacsu ◽  
Geoffrey Martin
Keyword(s):  
Risk Behavior ◽  
Risk Taking ◽  
Family Firms ◽  
Family Influence ◽  
Firm Risk ◽  
Dominant Firm ◽  
Agency Model ◽  
Family Control ◽  
Unique Nature ◽  
Behavioral Agency

We combine behavioral agency and family business literature to analyze the role of dominant firm principals in constraining the managerial agent’s (CEO’s) response to equity-based pay. Behavioral agency research has made progress in understanding CEO risk behavior in response to equity-based incentives and family firm risk behavior driven by concentrated socioemotional and financial firm-specific risk bearing. However, both literatures have evolved independently, which has limited our understanding of how the risk bearing of agent and principal influences the predictions of the behavioral agency model (BAM). We combine these literatures in order to enhance BAM’s predictive validity with regard to firm risk-taking as a function of both agent and principal risk preferences. Our findings suggest that family principals are more likely than nonfamily principals to constrain CEO risk behavior that is perceived as immoderate (excessively risk averse or excessively risk seeking). We also offer evidence that CEO ties to the family influence the CEO’s response to equity-based incentives. In doing so, we offer refinements to BAM’s formulation and advance our understanding of the unique nature of agency problems within family firms.

scholarly journals Impact of financial crisis and family control on earning management of Portuguese listed firms

2017 ◽  
Vol 6 (2) ◽  
Author(s):  
Inês Lisboa
Keyword(s):  
Financial Crisis ◽  
Earnings Management ◽  
Family Firms ◽  
Management Strategies ◽  
Negative Relationship ◽  
Earning Management ◽  
Family Control ◽  
Listed Firms ◽  
The Family ◽  
The Impact

Accounting information is used to evaluate the firm's financial performance. Although, firms may have incentives to engage in earnings management, misleading all stakeholders. This study aims to analyse earnings management behaviours of Portuguese listed firms. Both accrual-based and real activities of earnings management are analysed to draw an overall picture of earnings management’ strategies. Most studies focused only in discretionary accruals as a proxy for earnings management, since cash flow-based earnings management is more difficult to detect. Although both strategies can be complementary instead of substituting. Moreover, the impact of financial crisis, family control, and firm characteristics is taken into account. Previous literature found that 2008 crisis had impact on earnings management as firms want to meet debt covenants and investors’ expectations. Moreover, family firms also impact the magnitude of earnings management. While some researchers found a negative relationship since managers are highly controlled, others found the opposite relationship because the family may want to maximize their own wealth. Analysing 51 listed firms, from 2003 till 2015, results show that firms engage more in earnings management during crisis, when the firm's financial situation is less stable. In addition, accrual-based earnings management is higher in family firms than in non-family ones, suggesting less quality of information in the first group. Due to less control of family firms, the family may expropriate minority investors’ wealth to increase personal benefits. Finally, the impact of firms’ characteristics on earnings management depends on the proxy of earning management analysed, suggesting that firms use accrual or real-activities earnings management depending on its purposes.

scholarly journals Impact of Family Ownership on Market Value of a Firm: A Comparative Analysis of Family and Non-Family Companies Listed at Karachi Stock Exchange (Pakistan)

2015 ◽  
Vol 3 (12) ◽  
pp. 673-683
Author(s):  
Safdar Husain Tahir ◽  
Hazoor Muhammad Sabir
Keyword(s):  
Ownership Structure ◽  
Family Firms ◽  
Stock Exchange ◽  
Generalized Method Of Moments ◽  
Chief Executive ◽  
Family Ownership ◽  
Young Generation ◽  
Listed Firms ◽  
Inflection Points ◽  
The Impact

The current study attempts to investigate the impact of family ownership structure on value of firms listed at the Karachi Stock Exchange (KSE) of Pakistan. For the distinction of FOB from Non-FOB, two threshold points (25% & 50%) of ownership structure are used. A sample of 280 listed firms at KSE is collected ranging for the period 2002-13. Generalized Method of Moments (GMM) is applied on panel data to estimate the coefficients of variables. The empirical results indicate that the family firms outperform the non-family ones. The better performance of young generation of family firms over succeeding generation is also revealed but professional chief executive officer (CEO) over family member is preferred. Furthermore, this study discovers inflection points i.e. (62% & 57%) for family and non-family firms under quadratic specification respectively.

scholarly journals On The Impact Of Family Versus Institutional Blockholders On Dividend Policy

2015 ◽  
Vol 31 (4) ◽  
pp. 1329 ◽  
Author(s):  
Raoudha Djebali ◽  
Amel Belanes
Keyword(s):  
Institutional Investors ◽  
Dividend Policy ◽  
Ownership Concentration ◽  
Independent Directors ◽  
Dividend Payout ◽  
Controlling Shareholders ◽  
Listed Firms ◽  
Empirical Results ◽  
Large Panel ◽  
The Impact

This paper investigates the effect of not only the controlling shareholders but also their identity on dividend policy. For a large panel of French firms during the period 2006-2010, we find that the dividend payout ratio increases with the ownership concentration. However, this result changes with the identity of the largest shareholder. Family-controlled firms are more tempted to distribute lower dividends while firms dominated by institutional investors likely distribute higher dividends. Empirical results also reveal that firms with more independent directors are associated with higher dividend payout in contrast to US cross-listed firms.

Kebijakan Utang Jangka Panjang : Kajian Struktur Modal Entitas Terbuka Non Keuangan di Indonesia Yang Dikendalikan Keluarga

2010 ◽  
Vol 2 (1) ◽  
pp. 70-90
Author(s):  
Sugiarto Sugiarto
Keyword(s):  
Human Capital ◽  
Capital Structure ◽  
Financial Distress ◽  
Family Firms ◽  
Debt Maturity ◽  
Family Control ◽  
Listed Firms ◽  
Specific Human Capital ◽  
Capital At Risk ◽  
The Impact

Compared to non-family controlled firms, family controlled firms  have a stronger desire to maintain control to protect their highly valuable private benefits of control and firm-specific human capital. With substantial wealth and human capital at risk, family owners tend to be more risk averse than non-family owners, and also have stronger intention to reduce the prospect of financial distress and bankruptcy. These unique characteristics of family firms potentially make their capital structure decisions different from those of non-family firms. Panel data from 137 publicly listed firms in Indonesia from 1996 to 2005 were used to investigate the impact of family control on capital structure, particularly on debt maturity decisions. Keywords: Family controlled firms, capital structure decisions, debt maturity

scholarly journals The impact of ownership structure on firm performance: The role of chairman and CEO in Portugal

2017 ◽  
Vol 13 (2) ◽  
pp. 6-19 ◽  
Author(s):  
Lious Agbor Tabot Ntoung ◽  
Jorge Eduardo Vila Biglieri ◽  
Helena Maria Santos de Oliveira ◽  
Benjamim Manuel Ferreira de Sousa ◽  
Ben C. Outman ◽  
...  
Keyword(s):  
Ownership Structure ◽  
Family Firms ◽  
Corporate Performance ◽  
Active Management ◽  
Set Covering ◽  
Data Set ◽  
Family Control ◽  
Listed Firms ◽  
The Family ◽  
The Impact

This analysis investigates how family ownership structure affects the corporate performance of Portuguese listed firms using a panel data set covering the period from 2006 to 2014. Three characteristics of family firms (such as active management, active founder or heir and second blockholder) were examined with respect to the corporate performance. The main finding is that family firms over perform non-family in term productivity and profitability. This indicates that companies that have total family control are more productive and profitable than those market favour firms that the family does not have total ownership. Specifically, family firms with active founders perform better whereas those with active heirs significantly outperform compared to family firms with passive owners or heirs. Family firms with a family member in the company as either CEO or Chairman create more value and are more profitable than non-family firms. Family firms with descendant as CEO perform better meanwhile family firms with the founder as CEO significantly outperform family firms with Outside CEO for corporate performance. Lastly, the presence of a second blockholder who owns between 5-10% of the voting right enhances the corporate performance of the family firms as it counterbalances the controlling shareholder from unnecessary behaviours.

Are female leaders more efficient in family firms than in non-family firms?

2018 ◽  
Vol 18 (2) ◽  
pp. 185-205 ◽  
Author(s):  
Per-Olof Bjuggren ◽  
Louise Nordström ◽  
Johanna Palmberg
Keyword(s):  
Family Firms ◽  
Positive Impact ◽  
Female Leadership ◽  
Female Leaders ◽  
Firm Level ◽  
Content Type ◽  
Corporate Leaders ◽  
Listed Firms ◽  
Level Data ◽  
The Impact

Purpose The aim of this study is to investigate whether female leaders are more efficient in family firms than in non-family firms. Design/methodology/approach This paper uses a unique database of ownership and leadership in private Swedish firms that makes it possible to analyze differences in firm performance due to female leadership in family and non-family firms. The analysis is based on survey data merged with micro-level data on Swedish firms. Only firms with five or more employees are included in the analysis. The sample contains more than 1,000 firms. Findings The descriptive statistics show that there are many more male than female corporate leaders. However, the regression analysis indicates that female leadership has a much more positive impact on the performance of family firms than on that for non-family firms, where the effect is ambiguous. Originality/value Comparative studies examining the impact of female leadership on firm-level performance in family and non-family firms are rare, and those that exist are most often either qualitative or focused on large, listed firms. By investigating the role of female directors in family and non-family firms, the study adds to the literature on management, corporate governance and family firms.

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