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Manuscript Type Empirical Research Question/Issue This study investigates whether family firms use dividend policy as a corporate governance mechanism to overcome agency problems between the controlling family and minority investors. We further account for deviations between ownership and control and consider the presence and identity of other large shareholders in family companies. Research Findings/Insights Based on a sample of firms from nine Eurozone countries and using a panel data method, we find that family firms distribute higher and more stable dividends to alleviate expropriation concerns of minority investors. However, the higher dividend payments are mainly explained by family firms with no separation between the largest owner's voting and cash flow rights and those with non‐family second blockholders. Theoretical/Academic Implications We contribute to the literature by shedding light on how the family business model affects companies’ dividend preferences. Our research also highlights the importance of taking into account the identity of large shareholders, especially in a context in which concentrated ownership structures are commonplace. The reported differences in dividend policies between family and non‐family firms help to clarify the variant performances of family businesses found in previous studies. Practitioner/Policy Implications Family firms should regard dividend policy as a governance tool that allows them to attract prospective investors and enlarge their shareholder base. Simultaneously, minority investors can benefit from family firms’ dividend decisions. Our evidence also suggests that European policy makers should lay the necessary foundations to prevent controlling families from adopting ownership structures that serve their own personal interests.

Given the complexity of the family business phenomenon, empirical research has still reached no consensus on whether family control is beneficial or detrimental to firm performance. To shed new light on this issue, this paper covers more than 350 articles published in 37 top finance and management journals. More specifically, it provides an in‐depth analysis of the family business governance system in three steps. First, after examining the various family business definitions and measures of performance used in empirical research, the authors discuss the findings on the direct effect of family control on performance in different geographical regions. Second, the authors pay special attention to the choice of ownership structures by business families and analyse how family owners influence strategic decisions faced by their corporations, including the succession process. Finally, the authors explore the interaction of family control with other governance devices to gain a better understanding of family firms' corporate decision‐making and performance. The holistic approach highlights the need to contemplate the multiple relations that exist among the various governance dimensions of family firms to explain their unique performance. In addition to enhancing understanding of family business conduct, the authors emphasize the need to go beyond the borders of the family firm to identify its external antecedents and consequences. By integrating the finance and management perspectives and analysing the theoretical frameworks and methodologies used in these disciplines, the review highlights the need for interdisciplinary collaboration to advance family business research and thus to consolidate it as a distinctive academic field.

and two anonymous reviewers for their valuable comments and suggestions on previous versions of this paper. Financial support is gratefully acknowledged from the Spanish Ministry of Economy and Competitiveness (Grant ECO2013-45615-P). Any remaining error is our own responsibility.

This study investigates the relationship between family control and corporate capital structure considering the dynamic nature of the debt policy and the ownership structure of family firms. Our results show that the sensitivity of debt to fluctuations in cash flow is less pronounced in family firms and highlight that family control increases the speed of adjustment toward target debt. Four dimensions of the family business model explain these results: deviations of voting from cash flow rights, the presence of a second blockholder in the company, involvement of family members in management, and the generation in charge of the business. The weaker negative impact of cash flow on debt is driven by family firms with no control-enhancing mechanisms, companies with active family participation in management and family businesses that are still controlled by the first generation. By contrast, the more severe agency conflicts between owners and creditors in family firms with a second blockholder lead to more pronounced pecking order behaviour. Furthermore, the higher flexibility in corporate decision-making of family firms managed by the family and under the influence of the first generation explains why family companies are able to rebalance their capital structure faster.