Family Control of Firms and Industries |
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| Authors: | Belén Villalonga Raphael Amit |
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| Institution: | 1. Belén Villalonga is a Professor of Finance at Harvard Business School in Boston, MA.;2. Raphael Amit is a Professor of Management at the Wharton School of Business at the University of Pennsylvania in Philadelphia, PA. |
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| Abstract: | We test what explains family control of firms and industries and find that the explanation is largely contingent on the identity of families and individual blockholders. Founders and their families are more likely to retain control when doing so gives the firm a competitive advantage, thereby benefiting all shareholders. In contrast, nonfounding families and individual blockholders are more likely to retain control when they can appropriate private benefits of control. Families are more likely to maintain control when the efficient scale is small, the need to monitor employees is high, investment horizons are long, and the firm has dual-class stock. |
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