Family Ownership and Value of Takeover: Evidence from India

Jyoti Dixit and Poonam Singh ()
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Jyoti Dixit: National Institute of Industrial Engineering (NITIE), Mumbai 400087, Maharashtra, India
Poonam Singh: Department of Finance and Economics, National Institute of Industrial Engineering (NITIE), Mumbai 400087, Maharashtra, India

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2023, vol. 26, issue 02, 1-23

Abstract: We examine how family-ownership influences takeover probability and takeover public announcement abnormal return of Indian publicly traded firms between 2003 and 2019. We find that family ownership has a significantly negative effect on target takeover probability at various levels of family ownership, viz. 20%, 40%, and 51%. Announcement period abnormal returns for target firms are positive at a lower level of family ownership of 20% and negative at a higher level of family ownership of 51%. These results are consistent with the agency cost explanation where family ownership reduces owner-manager agency conflict but exacerbates conflict between majority and minority shareholders. Our results hold for Heckman two-stage model.

Keywords: Takeover; family firm; corporate governance; India (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1142/S0219091523500091

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