Family control, expropriation, and investor protection: A panel data analysis of Western European corporations

Julio Pindado, Ignacio Requejo and Chabela de la Torre

Journal of Empirical Finance, 2014, vol. 27, issue C, 58-74

Abstract: We investigate whether the value impact of family control in Western European firms depends on country-level investor protection. To this aim, we account for ownership–value nonlinearities. Supporting that the risk of expropriation increases with high ownership concentration, we find an inverted U-shape relation between family control and firm value. Family firms incur a value discount when family equity holdings exceed approximately 50%. The nonlinear effect of family control is attributable to family firms from a strongly protective environment. When investor protection is weak, family control has a positive impact on firm value regardless of the ownership concentration level.

Keywords: Family firm; Expropriation; Value impact; Nonlinearity; Investor protection (search for similar items in EconPapers)
JEL-codes: G32 G38 K22 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:empfin:v:27:y:2014:i:c:p:58-74

DOI: 10.1016/j.jempfin.2013.10.006

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