Family firms and the divestment decision: An agency perspective
This article examines how ownership, management and governance characteristics and the associated agency problems of family firms impact the divestment decision. Based on the divestment activity of 48 listed family firms in Belgium over a six-year period, I find an inverse U-shaped relationship between family ownership and divestment likelihood, supporting the alignment view at medium levels of family ownership but entrenchment at high ownership levels. In addition to ownership, the governance of the family firm also impacts the divestment decision. Divestiture likelihood is significantly lower when the family exerts its influence through the board of directors, consistent with the entrenchment view that they will use their influence to pursue non-economic goals. Founders, on the other hand, act as active monitors of the firm's activities and do not seem to be hindered by emotional considerations which result in more divestment activity as compared to other family firms.
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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 4 (2013)
Issue (Month): 1 ()
|Contact details of provider:|| Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/719791/description#description |
|Order Information:|| Postal: http://www.elsevier.com/wps/find/journaldescription.cws_home/719791/bibliographic|
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.:
- Maury, Benjamin, 2006. "Family ownership and firm performance: Empirical evidence from Western European corporations," Journal of Corporate Finance, Elsevier, vol. 12(2), pages 321-341, January.
- Salvatore Sciascia & Pietro Mazzola & Joseph Astrachan & Torsten Pieper, 2012. "The role of family ownership in international entrepreneurship: exploring nonlinear effects," Small Business Economics, Springer, vol. 38(1), pages 15-31, January.
- Bertrand, Marianne & Schoar, Antoinette, 2003.
"Managing With Style: The Effect of Managers on Firm Policies,"
4280-02, Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Marianne Bertrand & Antoinette Schoar, 2003. "Managing With Style: The Effect Of Managers On Firm Policies," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1169-1208, November.
- Villalonga, Belen & Amit, Raphael, 2006. "How do family ownership, control and management affect firm value?," Journal of Financial Economics, Elsevier, vol. 80(2), pages 385-417, May.
- Kang, Jun-Koo & Shivdasani, Anil, 1997. "Corporate restructuring during performance declines in Japan," Journal of Financial Economics, Elsevier, vol. 46(1), pages 29-65, October.
- Vojislav Maksimovic, 2001.
"The Market for Corporate Assets: Who Engages in Mergers and Asset Sales and Are There Efficiency Gains?,"
Journal of Finance,
American Finance Association, vol. 56(6), pages 2019-2065, December.
- Gordon M Phillips & Vojislav Maksimovic, 1999. "The Market for Corporate Assets: Who Engages in Mergers and Asset Sales and are there Efficiency Gains?," Working Papers 99-12, Center for Economic Studies, U.S. Census Bureau.
- Danny Miller & Isabelle Le Breton-Miller & Barry Scholnick, 2008. "Stewardship vs. Stagnation: An Empirical Comparison of Small Family and Non-Family Businesses," Journal of Management Studies, Wiley Blackwell, vol. 45(1), pages 51-78, 01.
- 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, vol. 13(5), pages 829-858, December.
- John, Kose & Lang, Larry H P & Netter, Jeffry, 1992. " The Voluntary Restructuring of Large Firms in Response to Performance Decline," Journal of Finance, American Finance Association, vol. 47(3), pages 891-917, July.
- Lang, Larry & Poulsen, Annette & Stulz, Rene, 1995.
"Asset sales, firm performance, and the agency costs of managerial discretion,"
Journal of Financial Economics,
Elsevier, vol. 37(1), pages 3-37, January.
- Larry Lang & Annette Poulsen & Rene M. Stulz, 1994. "Asset Sales, Firm Performance, and the Agency Costs of Managerial Discretion," NBER Working Papers 4654, National Bureau of Economic Research, Inc.
- Comment, Robert & Jarrell, Gregg A., 1995. "Corporate focus and stock returns," Journal of Financial Economics, Elsevier, vol. 37(1), pages 67-87, January.
- Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
- Yermack, David, 1996. "Higher market valuation of companies with a small board of directors," Journal of Financial Economics, Elsevier, vol. 40(2), pages 185-211, February.
- Larry H. P. Lang & Mara Faccio & Leslie Young, 2001. "Dividends and Expropriation," American Economic Review, American Economic Association, vol. 91(1), pages 54-78, March.
- 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, vol. 33(3-4), pages 517-543.
- Basu, Nilanjan & Dimitrova, Lora & Paeglis, Imants, 2009. "Family control and dilution in mergers," Journal of Banking & Finance, Elsevier, vol. 33(5), pages 829-841, May.
- Marianne Bertrand & Antoinette Schoar, 2006. "The Role of Family in Family Firms," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 73-96, Spring.
- Pieper, Torsten M., 2010. "Non solus: Toward a psychology of family business," Journal of Family Business Strategy, Elsevier, vol. 1(1), pages 26-39, March.
- Renneboog, Luc, 2000.
"Ownership, managerial control and the governance of companies listed on the Brussels stock exchange,"
Journal of Banking & Finance,
Elsevier, vol. 24(12), pages 1959-1995, December.
- Renneboog, L.D.R., 1999. "Ownership, Managerial Control and the Governance of Companies Listed on the Brussels Stock Exchange," Discussion Paper 1999-63, Tilburg University, Center for Economic Research.
- Belén Villalonga & Raphael Amit, 2009. "How Are U.S. Family Firms Controlled?," Review of Financial Studies, Society for Financial Studies, vol. 22(8), pages 3047-3091, August.
- Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-25, June.
- 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, vol. 12(5), pages 689-723.
- Demsetz, Harold & Lehn, Kenneth, 1985. "The Structure of Corporate Ownership: Causes and Consequences," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1155-77, December.
- Ronald C. Anderson & David M. Reeb, 2003. "Founding-Family Ownership and Firm Performance: Evidence from the S&P 500," Journal of Finance, American Finance Association, vol. 58(3), pages 1301-1327, 06.
- Thomas W. Bates, 2005. "Asset Sales, Investment Opportunities, and the Use of Proceeds," Journal of Finance, American Finance Association, vol. 60(1), pages 105-135, 02.
- Andres, Christian, 2008. "Large shareholders and firm performance--An empirical examination of founding-family ownership," Journal of Corporate Finance, Elsevier, vol. 14(4), pages 431-445, September.
- John, Kose & Ofek, Eli, 1995. "Asset sales and increase in focus," Journal of Financial Economics, Elsevier, vol. 37(1), pages 105-126, January.
- Dechun Wang, 2006. "Founding Family Ownership and Earnings Quality," Journal of Accounting Research, Wiley Blackwell, vol. 44(3), pages 619-656, 06.
- Wernerfelt, Birger & Montgomery, Cynthia A, 1988. "Tobin's q and the Importance of Focus in Firm Performance," American Economic Review, American Economic Association, vol. 78(1), pages 246-50, March.
When requesting a correction, please mention this item's handle: RePEc:eee:fambus:v:4:y:2013:i:1:p:34-41. 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: (Zhang, Lei)
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.