Factors Associated with Strategic Corporate Decisions in Family Firms: Evidence from Sweden

International Review of Finance, Forthcoming

44 Pages Posted: 21 May 2018 Last revised: 7 Nov 2019

See all articles by Naciye Sekerci

Naciye Sekerci

Utrecht University - School of Economics; Lund University

Multiple version iconThere are 2 versions of this paper

Date Written: May 4, 2018

Abstract

By using detailed ownership data from Sweden, we investigate the factors associated with corporate investment decisions in family firms compared to non-family firms. We find that the family owner’s portfolio diversification level is to some extent, and the use of dual-class share mechanism by the family owner is strongly associated with reduced corporate investment. We further show where entrenched family owners, holding dual-class shares, canalize firm free cash flows to: they prefer to distribute it as dividends with catering motivations. They opt for paying higher dividends over increasing corporate investment, which indicates some evidence of private benefits of control.

Keywords: family firms, portfolio diversification, corporate investment, dual-class shares, entrenchment

JEL Classification: G32, G34, G35, G39

Suggested Citation

Sekerci, Naciye, Factors Associated with Strategic Corporate Decisions in Family Firms: Evidence from Sweden (May 4, 2018). International Review of Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3174587 or http://dx.doi.org/10.2139/ssrn.3174587

Naciye Sekerci (Contact Author)

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, +31 30 253 7373 3584 EC
Netherlands

Lund University ( email )

Lund

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