EconPapers    
Economics at your fingertips  
 

Influence of family ownership on the industry-diversifying nature of a firm’s M&A strategy: Empirical evidence from Continental Europe

Corneel Defrancq, Nancy Huyghebaert and Mathieu Luypaert

Journal of Family Business Strategy, 2016, vol. 7, issue 4, 210-226

Abstract: We investigate how family ownership influences the industry-diversifying nature of M&As by listed companies in Continental Europe and the corresponding shareholder value effects at deal announcement. For a large sample of 3485 M&As during 2005–2013, we observe that acquirers having a family as the largest shareholder are less inclined to take over an unrelated target firm than lone-founder and other types of non-family firms. However, as the size of the family ownership stake increases, family firms become more eager to follow an industry-diversifying M&A strategy. While industry-diversifying M&As are associated with lower abnormal returns for acquirer shareholders on average, we also observe that family ownership fully reverses this negative effect. We therefore conclude that those unrelated M&As, although still representing a conflict of interest with the family firm’s minority investors, do not destroy shareholder value on average.

Keywords: Mergers and acquisitions; Diversification; Ownership; Family firms; Lone-founder firms; Corporate governance; Europe (search for similar items in EconPapers)
JEL-codes: G34 G32 L25 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1877858516300031
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:fambus:v:7:y:2016:i:4:p:210-226

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/719791/bibliographic
http://www.elsevier. ... 719791/bibliographic

Access Statistics for this article

Journal of Family Business Strategy is currently edited by J.H. Astrachan

More articles in Journal of Family Business Strategy from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2018-06-02
Handle: RePEc:eee:fambus:v:7:y:2016:i:4:p:210-226