No abstract

We examine whether institutional investors affect a firm's commitment to corporate social responsibility (CSR) for a large sample of firms from 41 countries over the period 2004 through 2013. We focus on environmental and social aspects of CSR, while controlling for firms' governance levels. We find that institutional ownership is positively associated with firm-level environmental and social commitments. Further, the "color of money" matters. Domestic institutional investors and non-U.S. foreign investors account for these positive associations, while U.S. institutional investors' holdings are not related to environmental and social scores. Similarly, higher scores are associated with long-term investors such as pension funds but not with hedge funds. Evidence from a quasi-natural experiment shows that institutional ownership causes improvements in environmental scores. Overall, our results suggest that institutional investors, in aggregate, use their ownership stakes to promote good CSR practices around the world.

This is the unspecified version of the paper.This version of the publication may differ from the final published version. We study whether and how family control affects valuation and corporate decisions during the 2008-2009 financial crisis using a sample of more than 8,500 firms from 35 countries. We find that family-controlled firms underperform significantly, they cut investment more relative to other firms, and these investment cuts are associated with greater underperformance. Further, we find that within family groups liquidity shocks are passed on through investment cuts across the group. Our evidence is consistent with families taking actions to increase the likelihood that the firms under their control and their control benefits survive the crisis, at the expense of outside shareholders. (JEL G01, G14, G32) * We study whether and how family control affects valuation and corporate decisions during the 2008-2009 financial crisis using a sample of more than 8,500 firms from 35 countries. We find that family-controlled firms underperform significantly, they cut investment more relative to other firms, and these investment cuts are associated with greater underperformance. Further, we find that within family groups liquidity shocks are passed on through investment cuts across the group. Our evidence is consistent with families taking actions to increase the likelihood that the firms under their control and their control benefits survive the crisis, at the expense of outside shareholders. (JEL G01, G14, G32) 3 Whether family control is beneficial for all shareholders or serves the family's best interest at the expense of outside shareholders is still unclear, despite much research on this issue. Permanent repository link:1 In this paper, we shed new light on this topic by studying, around the world, whether and how family control affects valuation and corporate decisions during the 2008-2009 financial crisis.We argue that the unexpected liquidity shock from the financial crisis moves firms out of equilibrium in a way that magnifies both the benefits and costs of family control. With liquidity scarce, a family could add value by providing greater access to finance via other firms under its control. However, a family's private benefits of control also can be affected by the crisis. A controlling family tends to be undiversified with its wealth tied up in the firm(s) it controls, and a liquidity shock can threaten the survival of the family empire. Relative to firms controlled by more diversified shareholders, family-controlled firms may be biased toward survival-oriented actions that help preserve the family's control benefits at the expense of outside shareholders.We use a sample of more than 8,500 nonfinancial firms from thirty-five countries to test whether outside shareholders update their expectations regarding the benefit or cost of family control during a financial shock. Our results show that across countries family-controlled firms underperform relative to other firms during the 2008-2009 global fin...

This is the unspecified version of the paper.This version of the publication may differ from the final published version. Permanent repository link: ABSTRACTWe show that in countries with strong investor protection, developed financial markets, and active markets for corporate control, family firms evolve into widely held companies as they age.In countries with weak investor protection, less developed financial markets, and inactive markets for corporate control, family control is very persistent over time. While family control in high investor protection countries is concentrated in industries that have low investment opportunities and low merger and acquisition (M&A) activity, the same is not so in countries that have low investor protection, where the presence of family control in an industry is unrelated to investment opportunities and M&A activity. (JEL G32, G34) 3 Parallel with the growth in the size of the industrial unit has come a dispersion in its ownership such that an important part of the wealth of individuals consists of interests in great enterprises of which no one individual owns a major part. A rapidly increasing proportion of wealth appears to be taking this form and there is much to indicate that the increase will continue. Adolf A. Berle and Gardiner Means, The Modern Corporation and Private PropertyThere is a common view, which can be traced back to Berle and Means (1932) andChandler (1977), that firms evolve over time from closely held, family-owned enterprises into managerially controlled, widely held corporations. In accordance with this "life cycle" view, family control should be negatively correlated with firm age.There is some evidence to support this view. Helwege, Pirinsky, and Stulz (2007) find that shareholder concentration declines over time in U.S. firms following their initial public offerings (IPOs) and stocks that are more liquid tend to become widely held more quickly.Franks, Mayer, and Rossi (2009) show that in UK firms, shareholder concentration is diluted over time as a result of merger and acquisition (M&A) activity. In a comprehensive study of IPO firms in thirty-four countries, Foley and Greenwood (2010) find that shareholder concentration decreases faster in firms within countries in which there is stronger investor protection than in countries with weaker investor protection. 4We contribute to this literature by analyzing the evolution, over time and across countries, of family control in listed and private firms. 1 Our focus is therefore on family control, rather than shareholder concentration, in private as well as public firms. Family control is important because it dominates many financial markets around the world. Focusing on private, as well as public, firms is important because the decision to go public is endogenous; hence, looking only at listed firms may give a biased measure of the evolution of family ownership in a country.Our analysis is based on two separate datasets of nonfinancial European firms-one detailed panel drawn from the four largest econo...

This is the unspecified version of the paper. This version of the publication may differ from the final published version. Permanent repository link: http://openaccess.city.ac.uk/3266/ Link to published version: http://dx.

This paper provides evidence on the incidence, characteristics, and performance of activist engagements across countries. We find that the incidence of activism is greatest with high institutional ownership, particularly for U.S. institutions. We use a sample of 1,740 activist engagements across 23 countries and find that almost one-quarter of engagements are by multi-activists engaging the same target. These engagements perform strikingly better than single activist engagements. Engagement outcomes, such as board changes and takeovers, vary across countries and significantly contribute to the returns to activism. Japan is an exception, with high initial expectations and low outcomes. (JEL G32)

No abstract

This is the unspecified version of the paper. This version of the publication may differ from the final published version. Permanent repository link: http://openaccess.city.ac.uk/3277/ Link to published version: http://dx. ABSTRACT We show that in countries with strong investor protection, developed financial markets, and active markets for corporate control, family firms evolve into widely held companies as they age. In countries with weak investor protection, less developed financial markets, and inactive markets for corporate control, family control is very persistent over time. While family control in high investor protection countries is concentrated in industries that have low investment opportunities and low merger and acquisition (M&A) activity, the same is not so in countries that have low investor protection, where the presence of family control in an industry is unrelated to investment opportunities and M&A activity. (JEL G32, G34) 3 Parallel with the growth in the size of the industrial unit has come a dispersion in its ownership such that an important part of the wealth of individuals consists of interests in great enterprises of which no one individual owns a major part. A rapidly increasing proportion of wealth appears to be taking this form and there is much to indicate that the increase will continue. Adolf A. Berle and Gardiner Means, The Modern Corporation and Private Property There is a common view, which can be traced back to Berle and Means (1932) and Chandler (1977), that firms evolve over time from closely held, family-owned enterprises into managerially controlled, widely held corporations. In accordance with this "life cycle" view, family control should be negatively correlated with firm age. There is some evidence to support this view. Helwege, Pirinsky, and Stulz (2007) find that shareholder concentration declines over time in U.S. firms following their initial public offerings (IPOs) and stocks that are more liquid tend to become widely held more quickly. Franks, Mayer, and Rossi (2009) show that in UK firms, shareholder concentration is diluted over time as a result of merger and acquisition (M&A) activity. In a comprehensive study of IPO firms in thirty-four countries, Foley and Greenwood (2010) find that shareholder concentration decreases faster in firms within countries in which there is stronger investor protection than in countries with weaker investor protection. 4 We contribute to this literature by analyzing the evolution, over time and across countries, of family control in listed and private firms. 1 Our focus is therefore on family control, rather than shareholder concentration, in private as well as public firms. Family control is important because it dominates many financial markets around the world. Focusing on private, as well as public, firms is important because the decision to go public is endogenous; hence, looking only at listed firms may give a biased measure of the evolution of family ownership in a country. Our analysis is based on two separate datasets of no...