The influence of family ownership on acquisition activity: The moderating role of acquisition experience

Diéguez‐Soto, Julio; López‐Delgado, Pilar; Mariño-Garrido, Teresa

doi:10.1080/00472778.2020.1725813

Cited by 10 publications

(9 citation statements)

References 115 publications

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“…CCC was calculated by adding days sales outstanding with days in inventory and then subtracting days payable outstanding. Consistent with Diéguez-Soto et al (2020), family ownership was measured as the percentage of shareholdings by family members. In addition to the dependent and independent variables, we have used several control variables including size, age and leverage.…”

Section: Methodsmentioning

confidence: 99%

“…However, various definitions and measurements of family ownership have been used in earlier studies (Martínez et al , 2007). For instance, Diéguez-Soto et al (2020) and Anderson and Reeb (2003) have used the proportion of family shareholding in a firm as a measure of family ownership. In contrast, Klein et al (2004) have defined family ownership as a dummy variable taking a value of 1 if family members owned at least 10% of shares, otherwise 0.…”

Section: Further Analysismentioning

confidence: 99%

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Impact of working capital management on firm profitability and liquidity: the moderating role of family ownership

Abdullah

Hashmi

Iqbal

2022

ARJ

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Purpose This study aims to analyze whether family ownership and working capital management (WCM) affect firm profitability and liquidity. Further, we also investigate the moderating effect of family ownership on the association between WCM, firm profitability and liquidity. Design/methodology/approach This study uses a sample of 150 nonfinancial companies listed on the Pakistan Stock Exchange for the period 2014–2019. For empirical analysis, this study used multiple proxies of family ownership and applied robust and bootstrapped quantile regression models. Findings The results suggest that family ownership has a negative association with firm profitability and liquidity. Moreover, this study finds a positive association between WCM and firm profitability and liquidity. Furthermore, the results indicate that family ownership negatively moderates the association between WCM and firm profitability. In addition, we argue that family ownership rescinds the impact of WCM as excess liquidity may be used for extracting private benefits and related party transactions. Originality/value First, this study has examined the nexus between family ownership, WCM, firm profitability and liquidity in the context of a developing country, i.e. Pakistan. Second, previous studies have not analyzed the moderating role of family ownership in the association between working capital management, firm profitability and liquidity. Third, this study provides unique evidence that family-owned firms have an adverse liquidity position as compared with other firms.

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Section: Methodsmentioning

confidence: 99%

Section: Further Analysismentioning

confidence: 99%

Impact of working capital management on firm profitability and liquidity: the moderating role of family ownership

Abdullah

Hashmi

Iqbal

2022

ARJ

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“…Experienced founders are able to recall the knowledge and solve issues effectively comparing to inexperienced founders. And in contrast, (Diéguez et al,. 2020) finds that a founder with a family-owned startup have a negative effect on the probability of founders acquiring, partnering or creating a different startup.…”

Section: Business Experiencementioning

confidence: 93%

Examining the Key Success Factors for Startups in the Kingdom of Bahrain

Sahaf

Tahoo

2021

IJBEG

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With Bahrain Economic Vision 2030, aspiring the shift from an economy that depends on oil wealth to a diversified economy, including startup businesses. A number of startups in Bahrain have been growing at a rapid pace in various industries. This is a result of the excellent ecosystem, and support provided to startups by the government in Bahrain. This study aims to examine the key success factors of startups in the Kingdom of Bahrain. The quantitative method was the adopted approach, whereby data was collected to examine the impact of four selected variables; fund-raising, experience, knowledge, and partnerships on the success of startups in Bahrain. The quantitative findings outlined the importance of several factors that were perceived to have a significant influence on the success of Bahraini Startups, where the majority of respondents agreed/strongly that two of the examined factors are considered critical to succeed in startups in the Kingdom of Bahrain. These factors are experience and knowledge, which proved to have an active role to maintain the success of startups. However, the startups’ founders disagreed on the impact of fund-raising and partnerships which are considered to have no major effect on the success of startups. Recommendations of this research include two segments; for founders is to seek more opportunities to enhance their knowledge and capitalize on their experiences, and for government entities to provide and improve training offerings, and facilitate founders’ communication and assist them in reaching out to the investors and the supporting entities, which will provide ease for new startup entry to the market, and establishment of a clear vision with framework prior to embarking the new venture.

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“…Hussinger and Issah (2019), in fact, in contributing with one of the few theoretical-empirical studies of recent years, report an exception to the finding that family firms enter into fewer M&As, namely, the case of related acquisitions. Diéguez-Soto et al (2020), meanwhile, point to the moderating role of acquisition experience: the negative bias on acquisition frequency is less important when the family firm was involved in prior acquisitions.…”

Section: Introductionmentioning

confidence: 95%

“…It is used to explain a preference for related targets (Gomez-Mejía et al, 2018), a greater probability of diversified acquisitions by family firms (Schierstedt et al, 2020) and differential valuations of targets by family firms, caused by founder and descendant board chairs having different perceptions of SEW (Haider et al, 2020). Hussinger and Issah (2019) and Diéguez-Soto et al (2020) combine SEW with a mixed gamble approach, in which family firms consider decisions assessing possible gains and losses (Bauweraerts et al, 2020). This approach allows them to set a counterpoint to the more classical results in the field.…”

Section: Introductionmentioning

confidence: 99%

Mergers by family firms and managerial delegation: a Cournot model and empirical evidence from Spain

Antelo

Peón

Martínez-Filgueira

2021

MRR

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Purpose The purpose of this paper is to analyse a key research hypothesis: Do firms ruled by managers have a greater rationale to implement a mergers and acquisitions (M&A) than (family) firms managed by their owners? Design/methodology/approach This paper uses an organizational-delegation-quantity oligopoly game to examine the profitability of M&As for firms that strategically delegate production decisions to managers versus family firms with no strategic delegation. This paper delimits the condition for delegation as aimed at increasing merger profitability: non-family CEOs will implement mergers more frequently than family CEOs and more so for inefficient firms because these require fewer synergies. The paper tests the main propositions with data on all M&As by small and medium firms in Spain in 2017 and 2018. Findings The greater the average operating margin of a firm, the more likely a merger, which is also more likely between non-family firms. The evidence of higher ex post synergies by firms is not statistically significant due to large variability, suggesting that some family firms did not obtain the expected ex ante synergies. The lesson is that family firms competing in an environment of high marginal costs (e.g. industries in the early stage of the life cycle) seeking to grow through inorganic means such as M&As have an incentive to professionalize management. Research limitations/implications This paper models competition in a Cournot fashion, representative of industries where firms compete in terms of sales growth and increased market share. Other results might hold in industries where firms are oriented to price competition or to service differentiation. The empirical research uses proxies for key variables such as the form of firm governance and unit costs, while hypotheses on ex ante synergies driving merger decisions had to be tested through ex post synergies. Originality/value M&As by small firms and family firms remain largely unexplored in the literature. This paper contributes with both a theoretical model and empirical research that highlight the implications of strategic delegation contracts for M&A deals.

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The influence of family ownership on acquisition activity: The moderating role of acquisition experience

Cited by 10 publications

References 115 publications

Impact of working capital management on firm profitability and liquidity: the moderating role of family ownership

Impact of working capital management on firm profitability and liquidity: the moderating role of family ownership

Examining the Key Success Factors for Startups in the Kingdom of Bahrain

Mergers by family firms and managerial delegation: a Cournot model and empirical evidence from Spain

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