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

31 Pages Posted: 13 Mar 2020 Last revised: 17 May 2020

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: March 2020

Abstract

By using detailed ownership data from Sweden, we investigate the factors associated with corporate investment decisions in family firms compared to nonfamily 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 demonstrate where entrenched family owners, holding dual‐class shares, canalize their firm free cash flows to: they prefer to distribute it as dividends with catering motivations. They opt to pay higher dividends over increasing corporate investment, which indicates some evidence of private benefits of control.

Suggested Citation

Sekerci, Naciye, Factors Associated with Strategic Corporate Decisions in Family Firms: Evidence from Sweden (March 2020). International Review of Finance, Vol. 20, Issue 1, pp. 45-75, 2020, Available at SSRN: https://ssrn.com/abstract=3553479 or http://dx.doi.org/10.1111/irfi.12217

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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