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Family Firms and the Enhanced Corporate Control: The Bright Side of Business Groups

Author

Listed:
  • Mauricio Jara-Bertin

    (Universidad de Chile)

  • Felix J. Lopez-Iturriaga

    (National Research University Higher School of Economics)

  • Juan Pablo Torres

    (Universidad de Chile)

Abstract

We analyze the effect of the enhanced corporate control on the Chilean family firms performance by considering the impact of both ownership pyramid structures and business groups. Our results suggest that lower levels of separation between control rights and ownership rights increase the firm performance but too much separation can result in perverse incentives for family members to extract private benefits. We also find that group affiliation is positive for family controlled firms. Furthermore, family business groups alleviate the negative effect of the disproportionate control, which corroborates the bright side of internal capital markets for family firms

Suggested Citation

  • Mauricio Jara-Bertin & Felix J. Lopez-Iturriaga & Juan Pablo Torres, 2016. "Family Firms and the Enhanced Corporate Control: The Bright Side of Business Groups," HSE Working papers WP BRP 52/MAN/2016, National Research University Higher School of Economics.
    • Handle: RePEc:hig:wpaper:52man2016
    as

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    More about this item

    Keywords

    Firm performance; Family corporate control; Pyramidal Structure; Business groups; Ownership structure.;
    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

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