THE EFFECT OF DIFFUSION OF FOUNDING FAMILY INFLUENCE AND INSIDER HOLDING ON FIRM VALUE: THE MODERATING EFFECT OF PYRAMIDAL OWNERSHIP
2006 (English)Conference paper (Refereed) Published
Insights from agency theory and the theory of altruism are used to empirically examine the relationship between founder descendant board membership and the market value of publicly traded firms in Norway, Sweden, and Spain. We argue that both economic incentives and positive altruism drive the board room behavior of persons associated with inherited wealth. Consequently, founder descendant board membership may reduce agency costs in public firms by ensuring the continuity of the founder’s strategic vision. We also hypothesize a non-linear relationship between insider holding and firm value in firms with a descendant board member, arguing that both market discipline and altruistic behavior can be key competitive advantage for family-influenced firms. We also hypothesize an efficiency based argument for a positive influence of pyramid ownership structures on the performance of firms with descendant board membership. This suggests that pyramids favor the creation of firm value in second and later generation family firms. Evidence from 254 firms in the three non-Anglo-American countries largely supports the presented hypotheses.
Place, publisher, year, edition, pages
Vienna, Austria, 2006.
IdentifiersURN: urn:nbn:se:bth-6284Local ID: oai:bth.se:forskinfo68A5412C0D22C147C1257342003F80E9OAI: oai:DiVA.org:bth-6284DiVA: diva2:833754
Strategic Management Society