The Influence of Family Blockholders on the Financial Behavior of Listed Family Firms

Fabio Franzoi

The Influence of Family Blockholders on the Financial Behavior of Listed Family Firms

by Fabio Franzoi (Author)
©2023, Thesis, 188 Pages
Law, Economics & Management

Series: Finance, Banking and Accounting, Volume 3

This dissertation investigates the influence of large family shareholders on financial decisions and the performance of listed firms in Germany. This country is especially interesting, as the German corporate governance system is considered less investor- friendly with a limited influence of shareholders on managerial decisions. Based on the incentive structure of family blockholders and their influence in corporate boards, the four studies offer a novel approach to analyzing the financial behavior of family firms. They use a hand-collected panel dataset identifying blockholders and every board position in 278 corporations. The dissertation demonstrates that the degree of family involvement in boards significantly influences working capital and earnings management as well as stock market performance and provides contributions for academia and practitioners alike.

Cover

Series Information

Contents

List of Abbreviations

1 Introduction

1.1 General Introduction

1.2 Economic Relevance

1.2.1 Prevalence of Family Firms

1.2.2 Ownership Concentration and Family Control in Germany

1.2.3 Listed Family Firms in Germany

1.3 Theoretical Framework

1.3.1 Principle Agent Theory

1.3.2 Socioemotional Wealth Theory

1.4 Assessment of Family Influence

1.4.1 Family Business Definition Dilemma

1.4.2 Implications of the German Dual Board System

1.4.3 Collection of Governance Data

1.5 Research Objectives

Research Objective 1 – Working Capital Management

Research Objective 2 – Earnings Management

Research Objective 3 – Stock Market Performance

Research Objective 4 – Financial Crises Performance

1.6 Dissertation Structure

2 The Influence of Family Board Involvement on Working Capital Management

2.1 Introduction

2.2 Literature Review

2.2.1 Working Capital Management

2.2.2 Family Firms and Working Capital

2.2.3 Corporate Governance and Working Capital

2.3 Hypothesis

2.4 Methodology

2.4.1 Data

2.4.2 Model Specification and Dependent Variables

2.4.3 Independent Variables

2.5 Results

2.5.1 Descriptive Statistics

2.5.2 Regression Results

2.6 Discussion and Robustness

2.6.1 Discussion

2.6.2 Robustness

2.7 Conclusion

2.8 Appendix

3 The Influence of Family Board Involvement on Earnings Management

3.1 Introduction

3.2 Literature Review and Hypothesis Development

3.2.1 Large Shareholders, Corporate Governance, and Earnings Management

3.2.2 Family Board Involvement

3.3 Sample Selection and Research Design

3.3.1 Sample

3.3.2 Detecting Earnings Management

3.3.2.1 Accrual-based Earnings Management

3.3.2.2 Real Earnings Management

Level of cash flow from operations

Level of production cost

Level of discretionary expenses

3.3.3 Accessing Family Influence

3.3.4 Research Design

3.3.4.1 Basic Model on Family Ownership

3.3.4.2 Advanced Model on Family Board Involvement

3.4 Results

3.4.1 Descriptive Statistics

3.4.2 Multivariate Results

3.5 Discussion

3.6 Conclusion

3.7 Appendix

4 Family Affairs – Corporate Governance Involvement of Families and Stock Market Returns

4.1 Introduction

4.2 Literature Review

4.2.1 Families as Blockholders

4.2.2 Corporate Governance and Stock Market Returns

4.3 Methodology

4.3.1 Sample and Family Influence Index

4.3.2 Model

4.4 Results and Discussion

4.4.1 Family Index and Portfolio Buy-and-hold Returns

4.4.2 Stock return regression

4.5 Discussion

4.6 Conclusion

4.7 Appendix

5 Sunshine after the Rain? The Stock Market Performance of Family Firms in and after Financial Crises

5.1 Introduction

5.2 Literature Review and Hypothesis

5.2.1 Family Firm Performance

5.2.2 Family Control, Financial Preconditions and Corporate Crisis Behavior

5.3 Methodology

5.3.1 Sample and Period under Review

5.3.2 Research Design

5.4 Results

5.4.1 Operative Performance and Buy-and-hold Returns

5.4.2 Regression Results

5.5 Discussion

5.5.1 Explaining Performance Differences

5.5.2 Robustness and Contribution

5.6 Conclusion

5.7 Appendix

6 Concluding Remarks

List of Figures

List of Tables

References

Pages:

188

Year:

2023

ISBN (HARDBACK):

9783631901274 (Active)

ISBN (EPUB):

9783631902608 (Active)

ISBN (PDF):

9783631902592 (Active)

DOI:

10.3726/b20854

Language:

English

Keywords:

family, Influence, Mark, Financial, Behavior, Financial crisis, Corporate Governance, abnormal returns, Blockholders, board composition, earnings management, Fabio, family firms, Family management, family ownership, financial reporting, Firms, Franzoi, Influence of family board involvement, Listed, Mietzner, Shareholder activism, Stock market performance of family firms, stock market returns, working capital

Published:

Berlin, Bern, Bruxelles, New York, Oxford, Warszawa, Wien, 2023. 188 pp., 10 fig. b/w, 31 tables.

Fabio Franzoi studied Corporate Management & Economics at Zeppelin University and in Siena. During his studies, he worked at the Friedrichshafen Institute of Family Entrepreneurship as well as the Chair for Banking and Finance. While pursuing a part-time PhD-program in the private sector, he earned his PhD at Zeppelin University in 2022. His research focus is on financing, performance and the specific ownership and control structures of family businesses.

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The Influence of Family Blockholders on the Financial Behavior of Listed Family Firms

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