Does it matter who owns firms? Evidence on the impact of supermajority control on private firms in Europe

Saul Estrin, Jan Hanousek and Anastasiya Shamshur

International Review of Financial Analysis, 2024, vol. 95, issue PB

Abstract: We explore how the type of owner affects private enterprise investment decisions in Europe. In contrast to the literature, we analyze firms with concentrated (>95%) ownership stakes to reduce the potential that agency problems contaminate our results. We consider four types of supermajority owners – family, institutional, corporate, and state and use detailed ownership and financial information from a large sample of private firms from 24 European countries from 2001 to 2018. We find that family-owned firms exhibit higher gross investment rates and substantially higher sensitivity to investment opportunities, profitability, cash flow, and value-added growth compared to corporate and institutional owners. At the same time, and more consistent with the literature, family-owned firms invest significantly less in intangible assets than other ownership types. To demonstrate the robustness of our results, we employ matching samples complemented by analysis of owner-type transitions from family owners to corporate and institutional owners.

Keywords: Private firms; Panel data; Europe; Ownership types; Investments; Cash flow sensitivity; Profitability; Business opportunities (search for similar items in EconPapers)
JEL-codes: D22 G31 G32 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Does it matter who owns firms? Evidence on the impact of supermajority control on private firms in Europe (2024)
Working Paper: Does it matter who owns firms? Evidence on the impact of supermajority control on private firms in Europe (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:95:y:2024:i:pb:s1057521924003594

DOI: 10.1016/j.irfa.2024.103427

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