The Effect of Family Control and Management on Performance, Capital Structure, Cash Holding, and Cash Dividends

Corporate Ownership & Control, Forthcoming. Volume 13, Issue 1, 2015, Continued - 10

16 Pages Posted: 27 Nov 2015 Last revised: 21 Jun 2017

See all articles by Marcio Telles Portal

Marcio Telles Portal

Mackenzie Presbyterian University; University of Vale do Rio dos Sinos (UNISINOS)

Leonardo Cruz Basso

Mackenzie Presbyterian University - Business Administration

Date Written: November 17, 2015

Abstract

This study investigates the effect of family firm on corporate performance and financial policy (capital structure, cash holding, and cash dividends). Using a sample of Brazilian firms, the study uses a treatment effect model to address self-selection and endogeneity problems. The results show that family firm has a negative net effect on performance. Family control have a effect on financial policies that indicate an aversive behavior to preserve control. The results indicate less problem of free cash flow and more risk-taking behavior in family-manage companies, suggesting that such aversion behavior is reduced when the family controls and manages the firm. This is the first study that takes into account the effect of family firm behavior through multiple financial policies.

Keywords: Family, Performance, Cash Holdings, Dividend, Capital Structure, Brazil, Risk Aversion, Risk Taking, Governance

JEL Classification: G32; G35

Suggested Citation

Portal, Marcio Telles and Cruz Basso, Leonardo, The Effect of Family Control and Management on Performance, Capital Structure, Cash Holding, and Cash Dividends (November 17, 2015). Corporate Ownership & Control, Forthcoming. Volume 13, Issue 1, 2015, Continued - 10, Available at SSRN: https://ssrn.com/abstract=2692168

Marcio Telles Portal (Contact Author)

Mackenzie Presbyterian University ( email )

Rua da Consolação 920
São Paulo, São Paulo 010302907
Brazil
+55 11 3236-8155 (Phone)
+55 11 3236-8600 (Fax)

HOME PAGE: http://www.mackenzie.br

University of Vale do Rio dos Sinos (UNISINOS) ( email )

Av. Unisinos, 950
São Leopoldo, 93022-000
Brazil
+55 51 3591-1122 (Phone)
+55 51 3590-8305 (Fax)

HOME PAGE: http://www.unisinos.br

Leonardo Cruz Basso

Mackenzie Presbyterian University - Business Administration ( email )

Rua da Consolacao, 896 7 - andar sala 73
01302-907 Sao Paulo
Brazil
+55 11 32368597 (Phone)
+55 11 32368600 (Fax)

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
309
Abstract Views
1,668
Rank
179,152
PlumX Metrics