Value of Control in Family Firms: Evidence from Mergers and Acquisitions

Aktas, Nihat; Centineo, Santo; Croci, Ettore

Volume 20, Number 2 / June , Pages 85-179

Multinational Finance Journal, 2016, vol. 20, no. 2, pp. 85-126

Nihat Aktas , WHU Otto Beisheim School of Management, Germany Corresponding Author

Santo Centineo , WHU Otto Beisheim School of Management, Germany
Ettore Croci , Universita’ Cattolica del Sacro Cuore, Italy

Abstract:
This article studies European acquisitions in the period 1990-2013 to examine the relationship between family ownership and the propensity to undertake diversifying acquisitions. We show that family firms, especially those highly leveraged, tend to make more cross-industry acquisitions as this allows the owners to effectively diversify their wealth without selling their shares. Our results also indicate that family firms that value control high (i.e., family firms with high leverage) appear not to diversify at the detriment of minority shareholders.

Keywords : family firms; leverage; control motives; acquisitions
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