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Small business groups enhance performance and promote stability, not expropriation. Evidence from French SMEs

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  • Anaïs Hamelin

    ()
    (LaRGE Research Center, Université de Strasbourg)

Abstract

This paper investigates the influence of a firm’s distance from control on its performance, using a unique firm level data set on small business ownership, as well as balance sheet information. This study fills a gap in the empirical governance literature by investigating whether or not there is an expropriation of minority shareholders in small business groups. Contrary to what is usually observed for large business groups, results show a positive relationship between the separation of control from ownership and firm performance. Results also underline that tunneling is used to promote controlling shareholders’ profit stability rather than profit maximization in small business groups.

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Bibliographic Info

Paper provided by Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg in its series Working Papers of LaRGE Research Center with number 2010-04.

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Date of creation: 2010
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Handle: RePEc:lar:wpaper:2010-04

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Keywords: Ownership; Control; Tunneling; Small Business; Performance.;

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  1. Vos, Ed & Yeh, Andy Jia-Yuh & Carter, Sara & Tagg, Stephen, 2007. "The happy story of small business financing," Journal of Banking & Finance, Elsevier, vol. 31(9), pages 2648-2672, September.
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Cited by:
  1. Anaïs HAMELIN, 2013. "Does Size Matter? Firm And Business Group Size Influence On The Benefits Of Group Affiliation," Working Papers of LaRGE Research Center 2013-10, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
  2. Bhaumik, Sumon Kumar & Selarka, Ekta, 2012. "Does ownership concentration improve M&A outcomes in emerging markets?," Journal of Corporate Finance, Elsevier, vol. 18(4), pages 717-726.
  3. Dong Xiang & Andrew C. Worthington & Helen Higgs, 2011. "Firm-level determinants and impacts of finance-seeking behaviour and outcomes for small and medium-sized enterprises (SMEs) in Australia," Discussion Papers in Finance finance:201115, Griffith University, Department of Accounting, Finance and Economics.
  4. Enrico Guzzini & Donato Iacobucci, 2012. "Business group affiliation and R&D propensity," Working Papers 1203, c.MET-05 - Centro interuniversitario di Economia Applicata alle Politiche per L'industria, lo Sviluppo locale e l'Internazionalizzazione.

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