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Family Ownership and Value of Takeover: Evidence from India

Author

Listed:
  • Jyoti Dixit

    (National Institute of Industrial Engineering (NITIE), Mumbai 400087, Maharashtra, India)

  • Poonam Singh

    (Department of Finance and Economics, National Institute of Industrial Engineering (NITIE), Mumbai 400087, Maharashtra, India)

Abstract

We examine how family-ownership influences takeover probability and takeover public announcement abnormal return of Indian publicly traded firms between 2003 and 2019. We find that family ownership has a significantly negative effect on target takeover probability at various levels of family ownership, viz. 20%, 40%, and 51%. Announcement period abnormal returns for target firms are positive at a lower level of family ownership of 20% and negative at a higher level of family ownership of 51%. These results are consistent with the agency cost explanation where family ownership reduces owner-manager agency conflict but exacerbates conflict between majority and minority shareholders. Our results hold for Heckman two-stage model.

Suggested Citation

  • Jyoti Dixit & Poonam Singh, 2023. "Family Ownership and Value of Takeover: Evidence from India," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 26(02), pages 1-23, June.
    • Handle: RePEc:wsi:rpbfmp:v:26:y:2023:i:02:n:s0219091523500091
    DOI: 10.1142/S0219091523500091
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    More about this item

    Keywords

    Takeover; family firm; corporate governance; India;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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