Advanced Search
MyIDEAS: Login to save this paper or follow this series

Ownership structure and acquirers performance: Family vs. non-family firms

Contents:

Author Info

  • Houssam Bouzgarrou

    ()
    (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie)

  • Patrick Navatte

    ()
    (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie)

Abstract

This paper investigates the impact of family control on French acquirers' performance.We consider a sample of 239 acquisitions undertaken by French listed companies between January 1997 and December 2006. Comparing both, short-termand long-termperformance,we find that family-controlled firms outperformnon-family firms. We find that the relationship depends on the control level. The higher operating performance of family firms is statistically significant for an intermediate level of control. Around the announcement date, family firms with a high level of control outperform non-family firms. Using the calendar time approach, we find that long-term stock performance of family firms is positive and statistically significant. Robustness tests showthat our findings seem to not be driven by the endogeneity problem. Finally, we find that family wedge, due to the use of the pyramidal structure and the double voting rules, has no statistical significant effect.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://halshs.archives-ouvertes.fr/docs/00/80/17/36/PDF/BOUZGARROU-NAVATTE-2013.pdf
Download Restriction: no

Bibliographic Info

Paper provided by HAL in its series Post-Print with number halshs-00801736.

as in new window
Length:
Date of creation: 2013
Date of revision:
Publication status: Published, International Review of Financial Analysis, 2013, 27, 123-134
Handle: RePEc:hal:journl:halshs-00801736

Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00801736
Contact details of provider:
Web page: http://hal.archives-ouvertes.fr/

Related research

Keywords: Acquisitions ; family firms ; agency theory ; stock performance ; operating performance;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Eugene F. Fama, . "Market Efficiency, Long-term Returns, and Behavioral Finance," CRSP working papers, Center for Research in Security Prices, Graduate School of Business, University of Chicago 340, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
  2. Bianco, Madga & Golinelli, Roberto & Parigi, Giuseppe, 2009. "Family firms and investments," MPRA Paper 19247, University Library of Munich, Germany.
  3. Julian Franks & Colin Mayer & Paolo Volpin & Hannes F. Wagner, 2012. "The Life Cycle of Family Ownership: International Evidence," Review of Financial Studies, Society for Financial Studies, Society for Financial Studies, vol. 25(6), pages 1675-1712.
  4. Sraer, David & Thesmar, David, 2004. "Performance and Behaviour of Family Firms: Evidence from the French Stock Market," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4520, C.E.P.R. Discussion Papers.
  5. Stein, Jeremy C, 1988. "Takeover Threats and Managerial Myopia," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 96(1), pages 61-80, February.
  6. Andrei Shleifer & Fausto Panunzi & Mike Burkart, 2002. "Family firms," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 24926, London School of Economics and Political Science, LSE Library.
  7. Servaes, Henri, 1991. " Tobin's Q and the Gains from Takeovers," Journal of Finance, American Finance Association, American Finance Association, vol. 46(1), pages 409-19, March.
  8. Loderer, Claudio & Martin, Kenneth, 1997. "Executive stock ownership and performance Tracking faint traces," Journal of Financial Economics, Elsevier, Elsevier, vol. 45(2), pages 223-255, August.
  9. Newey, Whitney K & West, Kenneth D, 1987. "A Simple, Positive Semi-definite, Heteroskedasticity and Autocorrelation Consistent Covariance Matrix," Econometrica, Econometric Society, Econometric Society, vol. 55(3), pages 703-08, May.
  10. Carline, Nicholas F. & Linn, Scott C. & Yadav, Pradeep K., 2009. "Operating performance changes associated with corporate mergers and the role of corporate governance," CFR Working Papers 04-08, University of Cologne, Centre for Financial Research (CFR).
  11. Stein, Jeremy C, 1989. "Efficient Capital Markets, Inefficient Firms: A Model of Myopic Corporate Behavior," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 104(4), pages 655-69, November.
  12. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, Econometric Society, vol. 48(4), pages 817-38, May.
  13. Belén Villalonga & Raphael Amit, 2009. "How Are U.S. Family Firms Controlled?," Review of Financial Studies, Society for Financial Studies, Society for Financial Studies, vol. 22(8), pages 3047-3091, August.
  14. Mara Faccio & Maria-Teresa Marchica & Roberto Mura, 0. "Large Shareholder Diversification and Corporate Risk-Taking," Review of Financial Studies, Society for Financial Studies, Society for Financial Studies, vol. 24(11), pages 3601-3641.
  15. Faccio, Mara & Lang, Larry H. P., 2002. "The ultimate ownership of Western European corporations," Journal of Financial Economics, Elsevier, Elsevier, vol. 65(3), pages 365-395, September.
  16. Claessens, Stijn & Djankov, Simeon & Lang, Larry H. P., 2000. "The separation of ownership and control in East Asian Corporations," Journal of Financial Economics, Elsevier, Elsevier, vol. 58(1-2), pages 81-112.
  17. MacKinnon, James G. & White, Halbert, 1985. "Some heteroskedasticity-consistent covariance matrix estimators with improved finite sample properties," Journal of Econometrics, Elsevier, Elsevier, vol. 29(3), pages 305-325, September.
  18. Villalonga, Belen & Amit, Raphael, 2006. "How do family ownership, control and management affect firm value?," Journal of Financial Economics, Elsevier, Elsevier, vol. 80(2), pages 385-417, May.
  19. Roosenboom, Peter & Schramade, Willem, 2006. "The price of power: Valuing the controlling position of owner-managers in French IPO firms," Journal of Corporate Finance, Elsevier, Elsevier, vol. 12(2), pages 270-295, January.
  20. Caprio, Lorenzo & Croci, Ettore & Del Giudice, Alfonso, 2011. "Ownership structure, family control, and acquisition decisions," Journal of Corporate Finance, Elsevier, Elsevier, vol. 17(5), pages 1636-1657.
  21. Demsetz, Harold & Lehn, Kenneth, 1985. "The Structure of Corporate Ownership: Causes and Consequences," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 93(6), pages 1155-77, December.
  22. Healy, Paul M. & Palepu, Krishna G. & Ruback, Richard S., 1992. "Does corporate performance improve after mergers?," Journal of Financial Economics, Elsevier, Elsevier, vol. 31(2), pages 135-175, April.
  23. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 1998. "Corporate Ownership Around the World," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1840, Harvard - Institute of Economic Research.
  24. Shleifer, Andrei & Vishny, Robert W., 2003. "Stock market driven acquisitions," Journal of Financial Economics, Elsevier, Elsevier, vol. 70(3), pages 295-311, December.
  25. Anderson, Ronald C. & Mansi, Sattar A. & Reeb, David M., 2003. "Founding family ownership and the agency cost of debt," Journal of Financial Economics, Elsevier, Elsevier, vol. 68(2), pages 263-285, May.
  26. John D. Lyon & Brad M. Barber & Chih-Ling Tsai, 1999. "Improved Methods for Tests of Long-Run Abnormal Stock Returns," Journal of Finance, American Finance Association, American Finance Association, vol. 54(1), pages 165-201, 02.
  27. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 94(3), pages 461-88, June.
  28. Roberto Barontini & Lorenzo Caprio, 2006. "The Effect of Family Control on Firm Value and Performance: Evidence from Continental Europe," European Financial Management, European Financial Management Association, European Financial Management Association, vol. 12(5), pages 689-723.
  29. Alexander Dyck & Luigi Zingales, 2002. "Private Benefits of Control: An International Comparison," NBER Working Papers 8711, National Bureau of Economic Research, Inc.
  30. Barber, Brad M. & Lyon, John D., 1997. "Detecting long-run abnormal stock returns: The empirical power and specification of test statistics," Journal of Financial Economics, Elsevier, Elsevier, vol. 43(3), pages 341-372, March.
  31. Walid Ben-Amar & Paul André, 2006. "Separation of Ownership from Control and Acquiring Firm Performance: The Case of Family Ownership in Canada," Journal of Business Finance & Accounting, Wiley Blackwell, Wiley Blackwell, vol. 33(3-4), pages 517-543.
  32. Mitchell, Mark L & Stafford, Erik, 2000. "Managerial Decisions and Long-Term Stock Price Performance," The Journal of Business, University of Chicago Press, University of Chicago Press, vol. 73(3), pages 287-329, July.
  33. Moeller, Sara B. & Schlingemann, Frederik P. & Stulz, Rene M., 2004. "Firm size and the gains from acquisitions," Journal of Financial Economics, Elsevier, Elsevier, vol. 73(2), pages 201-228, August.
  34. Jarrad Harford, 1999. "Corporate Cash Reserves and Acquisitions," Journal of Finance, American Finance Association, American Finance Association, vol. 54(6), pages 1969-1997, December.
  35. Shim, Jungwook & Okamuro, Hiroyuki, 2011. "Does ownership matter in mergers? A comparative study of the causes and consequences of mergers by family and non-family firms," Journal of Banking & Finance, Elsevier, Elsevier, vol. 35(1), pages 193-203, January.
  36. Lang, Larry H. P. & Stulz, ReneM. & Walkling, Ralph A., 1991. "A test of the free cash flow hypothesis*1: The case of bidder returns," Journal of Financial Economics, Elsevier, Elsevier, vol. 29(2), pages 315-335, October.
  37. Marianne Bertrand & Antoinette Schoar, 2006. "The Role of Family in Family Firms," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 20(2), pages 73-96, Spring.
  38. Morck, Randall & Shleifer, Andrei & Vishny, Robert W., 1988. "Management ownership and market valuation : An empirical analysis," Journal of Financial Economics, Elsevier, Elsevier, vol. 20(1-2), pages 293-315, January.
  39. Pindado, Julio & Requejo, Ignacio & de la Torre, Chabela, 2011. "Family control and investment–cash flow sensitivity: Empirical evidence from the Euro zone," Journal of Corporate Finance, Elsevier, Elsevier, vol. 17(5), pages 1389-1409.
  40. Charles P. Himmelberg & R. Glenn Hubbard & Darius Palia, 2000. "Understanding the Determinants of Managerial Ownership and the Link Between Ownership and Performance," NBER Working Papers 7209, National Bureau of Economic Research, Inc.
  41. Clifford G. Holderness, 2009. "The Myth of Diffuse Ownership in the United States," Review of Financial Studies, Society for Financial Studies, Society for Financial Studies, vol. 22(4), pages 1377-1408, April.
  42. Bauguess, Scott & Stegemoller, Mike, 2008. "Protective governance choices and the value of acquisition activity," Journal of Corporate Finance, Elsevier, Elsevier, vol. 14(5), pages 550-566, December.
  43. Kothari, S. P. & Warner, Jerold B., 1997. "Measuring long-horizon security price performance," Journal of Financial Economics, Elsevier, Elsevier, vol. 43(3), pages 301-339, March.
  44. Gao, Ning, 2011. "The adverse selection effect of corporate cash reserve: Evidence from acquisitions solely financed by stock," Journal of Corporate Finance, Elsevier, Elsevier, vol. 17(4), pages 789-808, September.
  45. Ghosh, Aloke, 2001. "Does operating performance really improve following corporate acquisitions?," Journal of Corporate Finance, Elsevier, Elsevier, vol. 7(2), pages 151-178, June.
  46. Andy Cosh & Paul M. Guest & Alan Hughes, 2006. "Board Share-Ownership and Takeover Performance," Journal of Business Finance & Accounting, Wiley Blackwell, Wiley Blackwell, vol. 33(3-4), pages 459-510.
  47. Fama, Eugene F. & French, Kenneth R., 1993. "Common risk factors in the returns on stocks and bonds," Journal of Financial Economics, Elsevier, Elsevier, vol. 33(1), pages 3-56, February.
  48. Chen, Ming-Yuan, 2005. "Group affiliation, identity of managers, and the relation between managerial ownership and performance," International Review of Financial Analysis, Elsevier, Elsevier, vol. 14(5), pages 533-558.
  49. Yen, Tze-Yu & Andre, Paul, 2007. "Ownership structure and operating performance of acquiring firms: The case of English-origin countries," Journal of Economics and Business, Elsevier, Elsevier, vol. 59(5), pages 380-405.
  50. Officer, Micah S., 2007. "The price of corporate liquidity: Acquisition discounts for unlisted targets," Journal of Financial Economics, Elsevier, Elsevier, vol. 83(3), pages 571-598, March.
  51. Dutta, Shantanu & Jog, Vijay, 2009. "The long-term performance of acquiring firms: A re-examination of an anomaly," Journal of Banking & Finance, Elsevier, Elsevier, vol. 33(8), pages 1400-1412, August.
  52. Andres, Christian, 2008. "Large shareholders and firm performance--An empirical examination of founding-family ownership," Journal of Corporate Finance, Elsevier, Elsevier, vol. 14(4), pages 431-445, September.
  53. Barber, Brad M. & Lyon, John D., 1996. "Detecting abnormal operating performance: The empirical power and specification of test statistics," Journal of Financial Economics, Elsevier, Elsevier, vol. 41(3), pages 359-399, July.
  54. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780195060119, October.
  55. Miller, Danny & Le Breton-Miller, Isabelle & Lester, Richard H. & Cannella Jr., Albert A., 2007. "Are family firms really superior performers?," Journal of Corporate Finance, Elsevier, Elsevier, vol. 13(5), pages 829-858, December.
  56. Stulz, ReneM., 1990. "Managerial discretion and optimal financing policies," Journal of Financial Economics, Elsevier, Elsevier, vol. 26(1), pages 3-27, July.
  57. Basu, Nilanjan & Dimitrova, Lora & Paeglis, Imants, 2009. "Family control and dilution in mergers," Journal of Banking & Finance, Elsevier, Elsevier, vol. 33(5), pages 829-841, May.
  58. Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, Elsevier, vol. 14(1), pages 3-31, March.
  59. Maury, Benjamin, 2006. "Family ownership and firm performance: Empirical evidence from Western European corporations," Journal of Corporate Finance, Elsevier, Elsevier, vol. 12(2), pages 321-341, January.
  60. Zhou, Yue Maggie & Li, Xiaoyang & Svejnar, Jan, 2011. "Subsidiary divestiture and acquisition in a financial crisis: Operational focus, financial constraints, and ownership," Journal of Corporate Finance, Elsevier, Elsevier, vol. 17(2), pages 272-287, April.
  61. Demsetz, Harold & Villalonga, Belen, 2001. "Ownership structure and corporate performance," Journal of Corporate Finance, Elsevier, Elsevier, vol. 7(3), pages 209-233, September.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:hal:journl:halshs-00801736. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.