scholarly journals Capital structure in blockholder-dominated firms: a closer look on corporate ownership and control

2010 ◽  
Vol 7 (3) ◽  
pp. 86-104
Author(s):  
Ottorino Morresi
Keyword(s):  
Capital Structure ◽  
Family Firms ◽  
Corporate Ownership ◽  
Founding Family ◽  
Italian Context ◽  
Cash Flow Rights ◽  
And Control ◽  
Pyramidal Groups ◽  
Over Time

In countries where holding control takes on much relevance it is arguable that capital structure choices are shaped in response to ownership characteristics. These issues are explored in the Italian context being dominated by pyramidal groups and majority-controlled firms. The results show that (1) family firms are more indebted than non-family counterparts and, within family firms, (2) founding-family controlled ones are more reliant on debt; (3) family firms exploit control-enhancing devices along with long-term leverage; (4) higher cash flow rights are associated with a lower leverage; (5) institutional investors are more common in firms with a higher dependence on long-term debt; (6) decreasing trends of the long-term leverage over time seem to occur with upward paths of the votes-to-capital ratio

scholarly journals Are Family Firms Different in Choosing and Adjusting Their Capital Structure? An Empirical Analysis through the Lens of Agency Theory

2016 ◽  
Vol 8 (7) ◽  
pp. 216 ◽  
Author(s):  
Ottorino Morresi ◽  
Alessia Naccarato
Keyword(s):  
Capital Structure ◽  
Family Firms ◽  
Adjustment Costs ◽  
Debt Ratio ◽  
Minority Shareholders ◽  
Negative Effects ◽  
Private Benefits ◽  
And Control ◽  
And Diffusion ◽  
Pyramidal Groups

<p>How do family firms choose and adjust their capital structure? A significant number of contributions have examined the problem from several angles but many issues remain a puzzle. We examine capital structure choices of family firms in Italy, a context characterized by high private benefits of control, separation between ownership and control, and diffusion of family-controlled pyramidal groups. Consistent with the agency-based models, family firms are found to be more leveraged than non-family counterparts as a result of their desire to hold control. We also find higher debt ratios in firms with a higher separation between ownership and control if and only if the firm is controlled by a family. This lends support to the fact that controlling families may want to allocate more debt to subsidiaries, where the separation is higher, in order to inflate assets under domination at the expense of minority shareholders, while controlling negative effects in case of bankruptcy of an affiliate. Finally, family firms are also found to behave differently when they adjust their debt ratio. We show that leverage persistence is higher in family firms because they bear higher adjustment costs as a result of higher agency costs of equity, but lower costs of deviating from the optimal debt level, because the tight links between controlling families and banks may allow family owners to negotiate deviations with banks more easily.</p>

Family Firm Performance: Further Evidence

2006 ◽  
Vol 19 (2) ◽  
pp. 103-114 ◽  
Author(s):  
Jim Lee
Keyword(s):  
Regression Analysis ◽  
Firm Performance ◽  
Relative Stability ◽  
Family Firms ◽  
Study Data ◽  
Employment Stability ◽  
Revenue Growth ◽  
Long Run ◽  
Founding Family ◽  
Over Time

This article empirically investigates the competitiveness and stability of family-owned firms relative to firms owned by diverse shareholders. Founding families are present in about one-third of the S&P 500—the sample of this study. Data gathered over the 1992—2002 period confirm that family firms tend to experience higher employment and revenue growth over time and are more profitable. Regression analysis also supports that firm performance improves when founding family members are involved in management. Although evidence on the relative stability in employment among family firms over the long run is tenuous, data from the most recent recession support the role that founding families play in maintaining employment stability during temporary market downturns.

How do Spanish unlisted family firms rebalance their capital structures?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zélia Serrasqueiro ◽  
Fernanda Matias ◽  
Julio Diéguez-Soto
Keyword(s):  
Capital Structure ◽  
Transaction Costs ◽  
Family Firms ◽  
Adjustment Costs ◽  
Dynamic Panel Data ◽  
Future Research ◽  
Short Term ◽  
Content Type ◽  
Speed Of Adjustment

PurposeThis paper seeks to analyze the family firm's capital structure decisions, focusing on the speed of adjustment (SOA) as well as on the effect of distance from the target capital structure on the SOA towards target short-term and long-term debt ratios in unlisted small and medium-sized family firms.Design/methodology/approachMethodologically, we use dynamic panel data estimators to estimate the effects of distance on the speeds of adjustment towards those targets. Data for the period 2006–2014 were collected for two research sub-samples: one sub-sample with 398 family firms; the other sub-sample contains 217 non-family firms.FindingsThe results show that the deviation from the target debt ratios impacts negatively on the speeds of adjustment towards target short-term and long-term debt ratios in unlisted family firms. These results suggest that family firms, deviating from target debt ratios, face deviation costs, i.e. insolvency costs, inferior to the adjustment costs, i.e. transaction costs. Therefore, family firms stay away from the target debt ratios for a long time than do non-family firms.Research limitations/implicationsThe research sample comprises a low number of family firms, therefore for future research we suggest increasing the size of the sample of family firms to get a deeper understanding of family firms' SOA towards capital structure. Additionally, we suggest the analysis of other potential determinants of the speed of adjustment towards target capital structure.Practical implicationsThe results obtained suggest that the distance from the target short-term and long-term debt ratios can be avoided if these firms do not depend almost exclusively on internal finance to adjust towards target capital structure. Moreover, for policymakers, we suggest the creation/promotion of alternative external finance sources, allowing reduced transaction costs that contribute to a faster adjustment of small family firms towards target capital structure.Originality/valueThe most previous research focusing on capital structure decisions have focused on listed family firms. To fill this gap, this study examines the speed of adjustment towards target debt ratios in the context of unlisted family firms. Moreover, transaction costs are a function of debt maturity, therefore this study examines separately the speeds of adjustment towards target short-term and long-term debt ratios. This paper shows that the adjustment costs (i.e. transaction costs) could hold back family firms from rebalancing its capital structure.

Are capital structure decisions of service SMEs different? Empirical evidence from Portugal

2011 ◽  
Vol 34 (1) ◽  
pp. 34-57 ◽  
Author(s):  
Zélia Serrasqueiro
Keyword(s):  
Capital Structure ◽  
Information Asymmetry ◽  
Manufacturing Industry ◽  
Estimation Method ◽  
Policy Makers ◽  
Content Type ◽  
Two Samples ◽  
Two Step Estimation ◽  
Over Time

PurposeThe purpose of this paper is to analyze the importance of information asymmetry in the relationships between Portuguese SME's capital structure decisions and creditors, comparing the results of service SME with those found in manufacturing SMEs.Design/methodology/approachTwo samples of Portuguese SMEs are considered: one sample is composed by 610 unlisted service SMEs; and, the other sample is made up by 381 unlisted SMEs in manufacturing industry, for the period 1999‐2006. To estimate the results, the two‐step estimation method is used, to control possible bias arising from data selection. In the first step, probit regression is used. In the second step, after the control for possible data bias, dynamic panel estimators are used.FindingsThe results obtained suggest that information asymmetry in the relationships between SMEs and creditors has a greater relative influence on capital structure decisions of service SMEs than on those of manufacturing SMEs.Practical implicationsGiven the increasing importance of service SMEs in the Portuguese economy for stimulating employment, business volume, and consequently economic growth, it would be advisable for policy makers to create special long‐term lines of credit, with advantageous terms, so that Portuguese service SMEs, when internal finance is insufficient, can finance more efficiently the growth opportunities and the strategies for diversification. In addition, since SMEs' capital structure decisions present differences, both concerning the sector of industry and over time, the measures adopted by policy makers should differentiate their measures between industry sectors and over time.Originality/valueFirst, this paper is pioneering in comparing the adjustment of actual short‐ and long‐term debts, in service and manufacturing SMEs, towards the respective target ratios. Second, it is pioneering in using dynamic estimators and in using the two‐step estimation method, in studies of determinants of capital structure decisions of service and manufacturing SMEs.

Separation of cash flow rights and control rights and debt among Malaysian family firms

2015 ◽  
Vol 5 (2) ◽  
pp. 184-201 ◽  
Author(s):  
Norhidayah Abdullah ◽  
Wee Ching Pok
Keyword(s):  
Cash Flow ◽  
Family Firms ◽  
Equal Proportion ◽  
Control Rights ◽  
Content Type ◽  
Shareholder Protection ◽  
Cash Flow Rights ◽  
Minority Interests ◽  
And Control ◽  
Debt Policy

Purpose – The purpose of this paper is to examine the relationship of separation of cash flow rights (CFR) and control rights (CR) and debt policy of Malaysian listed family firms. Design/methodology/approach – The sample of this study consists of 256 observations from companies listed in the Main Board of Bursa Malaysia for the period between year 2005 and 2009. The multivariate ordinary least square regressions have been conducted in order to examine the relationships between separation of CFR and CR and debt. Findings – The study reveals that the separation of CFR and CR does not lead to the increase of debt policy among Malaysian listed family-owned firms. Thus, the results suggest there is no expropriation of minority interests in Malaysian family-owned firms. The plausible reason is that Malaysia has better investor or shareholder protection laws compared to other emerging markets such as Indonesia, Thailand and Philippines. Research limitations/implications – The first limitation is the underestimation of CFR and CR because the affiliated business of unlisted firms and foreign companies are excluded. The second limitation is the presence of 100 percent ownership in firms controlled by family-owned firms or in firms that are controlled by another firms which are under the controlled of family-owned firms, or both, will lead to equal proportion of CFR and CR. Thus, the degree of separation of CFR and CR of such firms are indeterminable. Originality/value – This paper investigates the expropriation of minority interests by Malaysian family-owned firms on which has not been explored.

scholarly journals Corporate ownership and control: New evidence from Taiwan

2003 ◽  
Vol 1 (1) ◽  
pp. 87-101 ◽  
Author(s):  
Yin-Hua Yeh
Keyword(s):  
Cash Flow ◽  
Ownership Structure ◽  
Empirical Literature ◽  
Corporate Ownership ◽  
Control Rights ◽  
Controlling Shareholders ◽  
Control Power ◽  
Management Participation ◽  
Cash Flow Rights ◽  
And Control

Recent empirical literature on corporate governance has demonstrated that companies’ shares are generally concentrated in the hands of particular families or wealthy investors. Claessens et al. (2002) analyzed the ownership structure in East Asian eight countries, but misestimated the Taiwanese condition that made them not find the positive incentive or negative entrenchment effects in Taiwan. This study tries to clear the ultimate control in Taiwan, use the detailed data to better understand the ownership structure in Taiwan and investigates the determinants for deviation of control from cash flow rights. Based on the findings, the companies’ shares are common concentrated in the hands of the largest shareholder. We find that the deviation of control from cash flow rights is greater in the family-controlled companies than other type companies. Also the controlling shareholders use more pyramids and cross shareholding to increase their control rights that accompanies with deeply management participation. On the average, the controlling shareholders hold more than half board seats and usually occupy the chairman and general manger to enhance their control power in family-controlled companies. No matter in all sample or family-controlled companies, the controlling shareholders owns significantly less cash flow rights, occupy more board seats in deviation group companies than those without deviation. Corporate valuation is significantly lower in the companies with the divergence of control from cash flow rights than non-deviation companies.

Ownership Dynamics with Large Shareholders: An Empirical Analysis

2013 ◽  
Vol 48 (2) ◽  
pp. 579-609 ◽  
Author(s):  
Marcelo Donelli ◽  
Borja Larrain ◽  
I. Francisco Urzúa
Keyword(s):  
Stock Returns ◽  
Empirical Analysis ◽  
Cash Flow ◽  
Ownership Structure ◽  
Corporate Ownership ◽  
Data Set ◽  
Percentage Points ◽  
Block Trades ◽  
Cash Flow Rights ◽  
Over Time

AbstractWe study the empirical determinants of corporate ownership dynamics using a unique, hand-collected 20-year data set on the ownership structure of Chilean companies. Controllers’ blockholdings are on average high and stable over time. Controllers still make changes to their holdings through issuance and block trades. In a typical year controllers’ blockholdings decrease (increase) by 5 percentage points or more in approximately 6% (7%) of firms. We find that the separation between controllers’ voting and cash-flow rights reduces the likelihood of ownership dilution. Dilution is preceded by high stock returns and predicts low stock returns in the future when done through issuance.

Short-Term Increases in Aphid Dispersal From Defensive Dropping Do Not Necessarily Affect Long-Term Biological Control by Parasitoids

2019 ◽  
Vol 112 (4) ◽  
pp. 1552-1559
Author(s):  
Michelangelo La-Spina ◽  
Sarah E Jandricic ◽  
Rose Buitenhuis
Keyword(s):  
Biological Control ◽  
High Rate ◽  
Aphidius Ervi ◽  
Large Cage ◽  
Greenhouse Crops ◽  
Ornamental Crops ◽  
Foxglove Aphid ◽  
And Control ◽  
Over Time

Abstract Foxglove aphid (Aulacorthum solani (Kaltenbach) (Hemiptera: Aphididae)) is one of the principal aphid pests of greenhouse ornamental crops in North America. Biological control of foxglove aphid mostly relies on the use of Aphidius ervi Haliday (Hymenoptera: Braconidae). However, studies indicate that A. ervi may not be adapted to search for A. solani, and that in response to parasitoid attack aphids can drop and/or disperse, which may aggravate an infestation. Our goal was to further describe the searching behavior of A. ervi in the presence of foxglove aphids, the corresponding defensive behavior of foxglove aphid and the short- and medium-term effects on both pest dispersal and control by A. ervi. Behavioral observations were done on top and bottom leaves infested with foxglove aphid and a high release rate of A. ervi. Parasitoids tended to land on top leaves; however, more aphids were parasitized on bottom leaves, leading to equal numbers of parasitoid attacks in both locations. Most aphids dropped off the plant in the presence of a parasitoid. In large cage experiments, aphids were allowed to distribute naturally and A. ervi was released. The parasitoid still caused a high rate of aphid dropping. However, only a few aphids were able to successfully reach new plants, and most of these mummified over time. Our studies confirm that parasitoid-induced dispersal of foxglove aphid in greenhouse crops does occur, but also suggests this should not necessarily be a barrier to adoption of biological control, as A. ervi controls the aphids over time.

scholarly journals Northern White-Cedar Regeneration Dynamics on the Penobscot Experimental Forest in Maine: 40-Year Results

2010 ◽  
Vol 27 (1) ◽  
pp. 5-12 ◽  
Author(s):  
Catherine Larouche ◽  
Laura S. Kenefic ◽  
Jean-Claude Ruel
Keyword(s):  
Population Densities ◽  
Partial Cutting ◽  
Thuja Occidentalis ◽  
White Cedar ◽  
Sapling Growth ◽  
Northern White Cedar ◽  
And Control ◽  
Over Time ◽  
Measurement Period

Abstract The objective of this study was to assess the long-term dynamics of northern white-cedar (Thuja occidentalis L.) seedling and sapling growth and mortality on the Penobscot Experimental Forest in Maine. Data collected between 1965 and 2005 in four twice-replicated partial cutting treatments were analyzed. White-cedar seedlings established in all treatments despite relatively high white tailed-deer (Odocoileus virginianus Zimmerman) population densities. However, although it appears that regeneration cohorts of associated softwoods increased in size over time, the white-cedar cohort did not. Ingrowth of white-cedar from the seedling to sapling stage was lower than the combined rates of sapling mortality and recruitment to the pole stage; sapling density of this species in 2005 was >80% less than it was at the start of the measurement period. Sapling mortality was high, and recruitment to larger size classes was low, although mortality decreased and recruitment increased as sapling size increased. Browsing was prolific; 90% of white-cedar seedlings and small saplings showed signs of browse in 2005. Overall, white-cedar sapling growth was slow, with an estimated 100 years needed to grow from small sapling to merchantable size in the study stands. Efforts to release white-cedar saplings through precommercial treatment and control of browsing pressure are recommended.

Trends in the legal status of indigenous species

2000 ◽  
Vol 27 (4) ◽  
pp. 404-413 ◽  
Author(s):  
E. Knegtering ◽  
H.J. van der Windt ◽  
A.J.M. Schoot Uiterkamp
Keyword(s):  
Legal Status ◽  
Indigenous Species ◽  
Species Relationships ◽  
Human Species ◽  
Species Characteristics ◽  
Species Specific ◽  
And Control ◽  
Over Time ◽  
Ethical Perspectives

Which species will be intentionally preserved depends on societal perspectives regarding nature and species, but these have been little studied. In this study, it was hypothesized that in species-specific conservation, aesthetical perspectives, notably the appreciation of species characteristics as embodied in taxa, are important. However, this importance is changing due to variation in ecological (in particular, knowledge of species’ populations) and ethical perspectives (in particular regarding specific human-species relationships). The hypothesis was approached by assessing the relative involvement of different taxa in species-specific legislation on wild animals in the Netherlands over the period 1857–1995. Three objectives in this legislation were defined namely, ‘control’, ‘use’ and ‘protection’, based on purposes and potential levels of legally allowable taking. Over time, the number of species protected increased, whereas the numbers subject to ‘use’ and ‘control’ reached a peak and decreased again. The taxa included birds, mammals, amphibians, reptiles, fishes, bivalves, gastropods, cephalopods, insects, crustaceans and asteroids. Persistent differences were found in the relative involvement of taxa in the objectives as well as in the relative extent to which taxa were affected by long-term trends in numbers of species subject to the objectives. The results also show that species of one-and-the-same taxon were not regarded equally over time. It is concluded that the long-term changes in species’ legal status probably resulted from the combined effects of both the appreciation of species characteristics embodied in taxa and, in particular, changes in ethical perspectives regarding human-species relationships.

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