Does it matter who owns firms? Evidence on the impact of supermajority control on private firms in Europe

Estrin, Saul ORCID: 0000-0002-3447-8593, Hanousek, Jan and Shamshur, Anastasiya (2024) Does it matter who owns firms? Evidence on the impact of supermajority control on private firms in Europe. International Review of Financial Analysis, 95. ISSN 1057-5219

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Abstract

We explore how the type of owner affects private enterprise investment decisions in Europe. In contrast to the literature, we analyze firms with concentrated (>95%) ownership stakes to reduce the potential that agency problems contaminate our results. We consider four types of supermajority owners – family, institutional, corporate, and state and use detailed ownership and financial information from a large sample of private firms from 24 European countries from 2001 to 2018. We find that family-owned firms exhibit higher gross investment rates and substantially higher sensitivity to investment opportunities, profitability, cash flow, and value-added growth compared to corporate and institutional owners. At the same time, and more consistent with the literature, family-owned firms invest significantly less in intangible assets than other ownership types. To demonstrate the robustness of our results, we employ matching samples complemented by analysis of owner-type transitions from family owners to corporate and institutional owners.

Item Type:	Article
Official URL:	https://www.sciencedirect.com/journal/internationa...
Additional Information:	© 2024 The Authors
Divisions:	Management
Subjects:	H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management H Social Sciences > HG Finance
JEL classification:	G - Financial Economics > G3 - Corporate Finance and Governance > G31 - Capital Budgeting; Fixed Investment and Inventory Studies G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure
Date Deposited:	01 Jul 2024 09:51
Last Modified:	17 Jul 2024 07:12
URI:	http://eprints.lse.ac.uk/id/eprint/124030

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