TY - JOUR
T1 - Firm value and pyramidal structures
T2 - New evidence for family firms
AU - Jara, Mauricio
AU - López-Iturriaga, Félix J.
AU - Torres, Juan Pablo
N1 - Funding Information:
QTOB DVDFC DFC BG FMAN SIZE DEBT LTDEBT DIVID DIVER AGE Ln(LEVEL) FO DVDFC 0.061** DFC –0.099* –0.462*** BG 0.008 0.139*** –0.006 FMAN 0.067** –0.062** 0.052** 0.070*** SIZE 0.009 0.008 0.075*** 0.316*** 0.025 DEBT –0.058** –0.050* 0.013 –0.027 0.064** 0.377*** LTDEBT 0.069** 0.005 –0.147*** 0.146 –0.045* 0.406*** 0.387*** DIVID 0.500*** 0.058*** –0.034 0.03 –0.109*** –0.099*** –0.221*** –0.102*** DIVER –0.062** –0.092*** 0.014 0.109*** 0.011 0.245*** 0.205*** 0.175*** –0.073*** AGE –0.054** 0.054** –0.079*** 0.078*** 0.044* 0.072*** –0.071*** 0.032 –0.068*** –0.059** Ln(LEVEL) –0.063** 0.254*** 0.261*** 0.208*** –0.050** 0.069*** –0.085*** 0.029 0.0532 –0.037 0.007 FO –0.073*** –0.072*** 0.176*** –0.119*** 0.243*** –0.022 0.071*** –0.028 –0.134*** 0.062** 0.192*** –0.169*** INVAD 0.065*** –0.022 –0.136*** 0.092*** 0.078*** 0.053** –0.156* 0.045* −0.619** 0.025 −0.106*** 0.079* 0.038 Notes : ***, **, and * indicate a 99%, 95%, and 90% confidence level. Mauricio Jara is an Associate Professor of Finance at the Department of Business Administration of the University of Chile. He received his PhD at Universidad de Valladolid, Spain. His Doctoral Thesis won the Foundation of Financial Studies 2011 Prize and the Asepuc-ICAC 2011 prize. He has published in journals such as Corporate Governance: An International Review, Emerging Markets Review, Journal of Financial Stability, Journal of Family Business Strategy, Applied Economics, Journal of Corporate Finance, and Emerging Markets Finance and Trade, among others. His main research topics are related to corporate finance, corporate governance, and Family Firms. Felix Lopez-Iturriaga , PhD, is a Full Professor of Finance at the University of Valladolid (Spain) and at the NRU Higher School of Economics (Perm, Russia). He has been a Visiting Scholar at the Boston College, John Hopkins University (Baltimore) and Columbia University (New York). He has taught finance courses at several universities in UK, Austria, Belgium, France, Sweden, Germany, Hungary, Lithuania, Latvia, and Cyprus. He has earned teaching awards on three occasions and a number of research awards from the European Investment Bank, the Spanish Centre for Financial Studies, and the Spanish Foundation for Financial Studies. He has published several books and many papers in international journals such as Applied Economics, Applied Financial Economics, Corporate Governance: An International Review, Emerging Markets Finance and Trade, Research Policy, International Business Review, and Strategic Management Journal. His main research topics are related to auditing, corporate finance, and corporate governance. Kingdom), an MSc in Industrial Engineering (Operational Research), and a bachelor degree in Industrial Civil Engineering from the University of Santiago of Chile. His research deals with strategic thinking and has been published in Management Decision, European Journal of Operational Research and Journal of Family Business Strategy, among others. Juan Pablo Torres is an Assistant Professor of Management at the Department of Business Administration of the University of Chile. He was a Teaching Associate at the Warwick Business School (United Kingdom) and a Visiting Scholar at University College London (United Kingdom). Dr. Torres holds a PhD in Management from the Warwick Business School of the University of Warwick (United
Funding Information:
L?pez Iturriaga thanks the Spanish Ministry of Economy and Competitiveness for funding (ECO2017-84864-P). We thank Rodrigo Wagner, Francisco Marcet, Paolo Saona, Pablo San Mart?n, Philip Jaggs, and three anonymous referees as well as seminar attendants at BALAS 2017 Annual Conference for their valuable comments and suggestions. All remaining errors are our sole responsibility.
Publisher Copyright:
© 2019 Elsevier Inc.
PY - 2021/4
Y1 - 2021/4
N2 - In this paper, we analyze what effects separating ownership and control have on the performance of a sample of 99 Chilean family-controlled firms for the period 2001–2014. Our results show an inverse U-shaped relationship between voting rights and cash flow rights divergence and firm value. This result suggests that excessive divergence of rights makes the firm's value decline and can aggravate potential conflicts of interest inside family firms. We also find a positive moderating effect of business group affiliation, which highlights the ability of business groups to attenuate the negative impact of separating rights, particularly at high levels. We also find that family CEOs exert a beneficial effect on family firm performance at lower levels of divergence of rights, but that said effect disappears as the divergence of rights increases, suggesting that, when in control, family shareholders can ensure entrenchment by installing family member CEOs.
AB - In this paper, we analyze what effects separating ownership and control have on the performance of a sample of 99 Chilean family-controlled firms for the period 2001–2014. Our results show an inverse U-shaped relationship between voting rights and cash flow rights divergence and firm value. This result suggests that excessive divergence of rights makes the firm's value decline and can aggravate potential conflicts of interest inside family firms. We also find a positive moderating effect of business group affiliation, which highlights the ability of business groups to attenuate the negative impact of separating rights, particularly at high levels. We also find that family CEOs exert a beneficial effect on family firm performance at lower levels of divergence of rights, but that said effect disappears as the divergence of rights increases, suggesting that, when in control, family shareholders can ensure entrenchment by installing family member CEOs.
KW - Business groups
KW - Family corporate control
KW - Firm performance
KW - Pyramidal ownership
UR - http://www.scopus.com/inward/record.url?scp=85076616083&partnerID=8YFLogxK
U2 - 10.1016/j.jbusres.2019.10.063
DO - 10.1016/j.jbusres.2019.10.063
M3 - Article
AN - SCOPUS:85076616083
SN - 0148-2963
VL - 127
SP - 399
EP - 412
JO - Journal of Business Research
JF - Journal of Business Research
ER -