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The role of family control and ownership in M&A decisions: Evidence from an emerging market

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  • Kabbach-de-Castro, Luiz Ricardo
  • Meirelles-de-Castro, Mariana Martins
  • Kalatzis, Aquiles Elie Guimarães

Abstract

Family firms frequently confront a strategic tension between protecting socioemotional wealth and pursuing financial growth. Adopting a mixed-gamble approach, we examine how family-controlled firms assess mergers and acquisitions (M&A) by balancing potential financial benefits against perceived socioemotional risks. Our findings show that family control is associated with a lower likelihood of engaging in M&A transactions, reflecting a conservative strategic position. However, the structure of family ownership moderates this behavior: stronger voting rights increase the probability of acquisitions by reducing perceived threats to control, whereas higher cash flow rights amplify financial risk aversion, further discouraging acquisition activity. These effects are robust across variations in firm size, growth opportunities, dividend policies, and deal characteristics, such as industry-related and domestic deals. By showing how governance configurations shape the framing of M&A strategic decisions, our study extends the mixed-gamble framework and highlights the internal signals family firms rely upon when navigating complex growth choices. The findings offer new insights into the governance-driven foundations of family firm behavior, particularly under the heightened uncertainty of emerging market environments.

Suggested Citation

  • Kabbach-de-Castro, Luiz Ricardo & Meirelles-de-Castro, Mariana Martins & Kalatzis, Aquiles Elie Guimarães, 2025. "The role of family control and ownership in M&A decisions: Evidence from an emerging market," Research in International Business and Finance, Elsevier, vol. 80(C).
    • Handle: RePEc:eee:riibaf:v:80:y:2025:i:c:s0275531925003812
    DOI: 10.1016/j.ribaf.2025.103125
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    Keywords

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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • 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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