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The Impact of Family Ownership and Dual Class Shares on Takeover Risk
Uppsala University, Humanistisk-samhällsvetenskapliga vetenskapsområdet, Faculty of Social Sciences, Department of Economics.
2007 (English)In: Applied Financial Economics, Vol. 17, 785-804 p.Article in journal (Refereed) Published
Abstract [en]

In this paper we explore the relation between the use of dual class shares and the risk of takeovers. Our results stress the need to control for the identity of the controlling owner in studies of corporate control and firm performance. For family controlled firms, we find that both the hazard rate of takeover and firm market value decline with the wedge between the families’ voting rights and cash flow rights. We conclude that due to non-transferable private benefits of control in family firms, dual class shares reduce the likelihood that the family will accept the terms of value enhancing takeovers and this translates into lower firm value.

Place, publisher, year, edition, pages
2007. Vol. 17, 785-804 p.
URN: urn:nbn:se:uu:diva-13481OAI: oai:DiVA.org:uu-13481DiVA: diva2:41251
Available from: 2008-01-23 Created: 2008-01-23 Last updated: 2011-01-11

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