 Family ownership, country governance, and foreign portfolio investmentAndriy Bodnaruk, Massimo Massa and Vijay Yadav Journal of Empirical Finance, 2017, vol. 41, issue C, 96-115 Abstract: We study how different dimensions of family ownership combine to make family firms around the world appealing to foreign investors. Family firms provide the benefits of political connections, but at the same time they are more prone to expropriate minority shareholders themselves. This cost-benefit trade-off depends on the quality of country governance: families are attractive investment opportunities in countries in which the value of political connections is high, but the majority shareholders have limited ability to expropriate, i.e., “useful” countries. Foreign investors – more sensitive both to the risk of expropriation by the government and to the risk of expropriation by majority shareholders – are particularly responsive to this trade-off. While on average foreign institutional investors are less likely to invest in family firms and such firms have lower value, these effects disappear when family ownership in a country is useful. Keywords: Corporate governance; Foreign investment; Ownership structure; Family firms (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:empfin:v:41:y:2017:i:c:p:96-115 DOI: 10.1016/j.jempfin.2017.01.002 Access Statistics for this article Journal of Empirical Finance is currently edited by R. T. Baillie, F. C. Palm, Th. J. Vermaelen and C. C. P. Wolff More articles in Journal of Empirical Finance from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.