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Ownership structure and firm performance in non-listed firms: Evidence from Spain

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  • Arosa, Blanca
  • Iturralde, Txomin
  • Maseda, Amaia
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    Abstract

    This study provides new evidence regarding the way in which ownership concentration influences non-listed firm performance focusing on the conflict between majority and minority shareholders, and differentiating between the behavior of family and non-family firms, using data from 586 non-listed Spanish firms. In first-generation family firms our research shows that agency theory can be used to explain the role of ownership concentration in balancing conflicts between shareholder groups. A greater concentration of firm ownership in the first generation may bring the monitoring and expropriation hypotheses into play, whereas firms in which subsequent generations have joined may show a greater spread of ownership. In first generation family firms, the classic owner-manager conflict is mitigated due to the large shareholder's greater incentives to monitor the manager. However, a second type of conflict appears. The large shareholder may use its controlling position in the firm to extract private benefits at the expense of the small shareholders. The empirical evidence shows that for family firms, the relationship between ownership concentration and firm performance differs depending on which generation of the family manages the firms.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Family Business Strategy.

    Volume (Year): 1 (2010)
    Issue (Month): 2 (June)
    Pages: 88-96

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    Handle: RePEc:eee:fambus:v:1:y:2010:i:2:p:88-96

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    Keywords: Ownership SMEs Non-listed firms Family firms Performance;

    References

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    Cited by:
    1. Basco, Rodrigo & Pérez Rodríguez, María José, 2011. "Ideal types of family business management: Horizontal fit between family and business decisions and the relationship with family business performance," Journal of Family Business Strategy, Elsevier, Elsevier, vol. 2(3), pages 151-165.
    2. Block, Joern H. & Jaskiewicz, Peter & Miller, Danny, 2011. "Ownership versus management effects on performance in family and founder companies: A Bayesian reconciliation," Journal of Family Business Strategy, Elsevier, Elsevier, vol. 2(4), pages 232-245.
    3. Mazzi, Chiara, 2011. "Family business and financial performance: Current state of knowledge and future research challenges," Journal of Family Business Strategy, Elsevier, Elsevier, vol. 2(3), pages 166-181.
    4. Tappeiner, Florian & Howorth, Carole & Achleitner, Ann-Kristin & Schraml, Stephanie, 2012. "Demand for private equity minority investments: A study of large family firms," Journal of Family Business Strategy, Elsevier, Elsevier, vol. 3(1), pages 38-51.
    5. Basco, Rodrigo, 2013. "The family's effect on family firm performance: A model testing the demographic and essence approaches," Journal of Family Business Strategy, Elsevier, Elsevier, vol. 4(1), pages 42-66.
    6. Goel, Sanjay & Mazzola, Pietro & Phan, Phillip H. & Pieper, Torsten M. & Zachary, Ramona K., 2012. "Strategy, ownership, governance, and socio-psychological perspectives on family businesses from around the world," Journal of Family Business Strategy, Elsevier, Elsevier, vol. 3(2), pages 54-65.
    7. Aiello, Francesco & Ricotta, Fernanda, 2014. "Firm heterogeneity in productivity across Europe. What explains what?," MPRA Paper 56222, University Library of Munich, Germany.
    8. Audretsch, David B. & Hülsbeck, Marcel & Lehmann, Erik E., 2013. "Families as active monitors of firm performance," Journal of Family Business Strategy, Elsevier, Elsevier, vol. 4(2), pages 118-130.
    9. San Martin-Reyna, J.M. & Duran-Encalada, Jorge A., 2012. "The relationship among family business, corporate governance and firm performance: Evidence from the Mexican stock exchange," Journal of Family Business Strategy, Elsevier, Elsevier, vol. 3(2), pages 106-117.

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