Family control and investment–cash flow sensitivity: Empirical evidence from the Euro zone

By Julio Pindado, Ignacio Requejo, C. Torre. 2011

190 citations recorded by the source corpus.

This paper considers the ownership structure of family firms to determine whether family control alleviates or exacerbates investment–cash flow sensitivity in the Euro zone. We find that family-controlled corporations have lower investment–cash flow sensitivities. Further, our results show that this reduced sensitivity is mainly attributable to family firms with no deviations between cash flow and voting rights and to family firms in which family members hold managerial positions. We also find that second largest shareholders affect family firms' sensitivity and are associated with either monitoring (non-family second blockholders) or collusion (family second blockholders). Overall, family control seems to mitigate investment inefficiencies that derive from capital market imperfections.

Subfields: Accounting, Organizational Behavior and Human Resource Management

View Paper: https://www.semanticscholar.org/paper/35c3b692f1fb5c5a2e5607aa71c490fa27c8662a

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

1. Gary Gang Tian
2. M. Cucculelli
3. Xiaofei Pan
4. Qigui Liu
5. F. Ricotta
6. L. Mannarino
7. Valeria Pupo

In Organizational Behavior and Human Resource Management

1. M. Cucculelli
2. Qigui Liu
3. Gary Gang Tian
4. F. Ricotta
5. L. Mannarino
6. Valeria Pupo

Citations in the corpus

• Owner‐Management, Firm Age, and Productivity in Italian Family Firms (2014, background): “Pindado et al. (2011) have the same limitation for ownership information for each company which they overcome by merging ownership data from one single year with data from several years.”
• To what extent did the economic stimulus package influence bank lending and corporate investment decisions? Evidence from China (2018, background): “5 These measures include (1) the ratio of change in net fixed assets plus depreciation to total net fixed assets (Pindado et al., 2011; Firth et al., 2012) and (2) net capital expenditure to total assets (Firth et al.”
• Financial flexibility, corporate investment and performance: evidence from financial crises (2013, unknown): “By doing so, our study also contributes to the rich literature that examines whether large investment to cash flow sensitivities can be treated as evidence of financing frictions (see, e.g., Fazzari et al. 1988; Kaplan and Zingales 1997; Cleary 1999; Guariglia 2008; Pindado et al. 2011).”