Family ownership and M&A propensity in emerging market firms: Playing along the “rules of the game”

Vidya Sukumara Panicker and Elena Georgiadou

Journal of Family Business Strategy, 2025, vol. 16, issue 1

Abstract: The literature is ambivalent about the impact of family ownership on Mergers and Acquisitions (M&A) undertaken by family firms with prior studies arguing that family Socioemotional Wealth (SEW) may either promote or dissuade M&A. To investigate this ambivalence, we combine SEW and institutional perspectives to examine the influence of family ownership, institutional shareholding, and board composition, on M&A propensity of family firms, in the emerging market of India. On a sample of 3209 Indian firms (of which 1824 are family firms) in the 2006–2017 time-period, we find that family ownership positively impacts M&A propensity of family firms. However, ownership by domestic financial institutions negatively moderates the relationship between family ownership and M&A propensity in these firms. We also find that the presence of family directors and independent directors on the board is instrumental in promoting family firm M&A. Our findings enhance the understanding of M&A propensity in family firms within a specific emerging market and illustrate how this propensity is influenced by the corporate governance characteristics in these firms.

Keywords: Emerging markets; Family firm; Institutional investors; Institutional theory; M&A propensity; Socioemotional wealth (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:fambus:v:16:y:2025:i:1:s1877858524000433

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DOI: 10.1016/j.jfbs.2024.100648

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