Ownership Effects on Unrelated Diversification: An Institutions’ Perspective

Kavadis, Nikolaos; Castañer, Xavier

doi:10.1108/s0742-332220140000031007

Cited by 14 publications

(19 citation statements)

References 88 publications

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“…Further, we include the role of owners' institutional origin, and show that owner institutional origin matters in terms of impact on corporate restructuring. Hence, we contribute to research that has elaborated on the differing motives and behaviors of various types of owners (e.g., Aguilera & Jackson, 2003;Kavadis & Castañer, 2014), and that firm-level outcomes are likely to result from the interaction of different actors (Aguilera & Jackson, 2010;Goyer, 2007;Jackson, 2005;Jung et al, 2014).…”

Section: Discussionmentioning

confidence: 99%

“…They have an indirect effect with regard to explaining restructuring costs in firms with family owners and/or family CEOs. Anglo‐American owners may well have direct effects in publicly‐listed firms in general with regard to specific decisions of corporate strategy, such as business and geographic diversification, divestments, and business exits (e.g., Goyer, ; Kavadis & Castañer, ; Morin, ).…”

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confidence: 99%

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Who Drives Corporate Restructuring? Co‐Existing Owners in French Firms

Kavadis¹,

Castañer²

2015

Corporate Governance

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Manuscript Type Empirical Research Question/Issue This study aims to explain who drives corporate restructuring, after a period of important corporate governance changes in France, and where the respective role of Anglo‐American institutional investors and domestic family owners have been the object of debate. Research Findings/Insights Using extensive longitudinal data from French publicly‐listed firms during the 2000–2007 period, we find that domestic family ownership is positively related to restructuring. This effect is magnified under conditions of high Anglo‐American institutional investor ownership and poor firm performance. We also find that restructuring improves subsequent firm performance. Theoretical/Academic Implications We contribute to corporate governance research on family firms with a contingent framework about the relative influence of different types of owners with supposedly different value systems and preferences on restructuring. Domestic family owners, even from a country where shareholder value maximization is not historically preeminent, promote restructuring. In contrast, the influence of Anglo‐American institutional investors is indirect: the more they are present in the firm's capital, the more French family owners will further support restructuring, as a means to preserve their socio‐emotional wealth. Anglo‐American institutional investor influence on French family owners is further accentuated under conditions of poor firm performance. Practitioner/Policy Implications Practitioners and, in particular, (potential and current) owners can use our findings to reflect on the implications for corporate decisions of the relative presence of different owners coming from different institutional environments and thus with potentially different objectives. Our results may also be informative to policy makers to further enhance effective regulation.

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Section: Discussionmentioning

confidence: 99%

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confidence: 99%

Who Drives Corporate Restructuring? Co‐Existing Owners in French Firms

Kavadis¹,

Castañer²

2015

Corporate Governance

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“…Empirical evidence underlines the wide diversity of individual and organizational ownership with respect to the type, such as founder, family, corporate, governmental and institutional (Aguilera, Talaulicar, Chung, Jimenez, & Goel, ; Tihanyi et al, ; Wood & Wright, ), portfolio characteristics of the investor (Bushee, ; Goranova, Dharwadkar, & Brandes, ), activism propensity (Goranova, Abouk, Nystrom, & Soofi, ), or the country of institutional origin (Kavadis & Castañer, ; La Porta, López‐de‐Silanes, Shleifer, & Vishny, ; Zattoni & Judge, ). Furthermore, prior research finds that different types of organizational owners differ in their monitoring effectiveness (Davis & Kim, ; Hoskisson, Hitt, Johnson, & Grossman, ) and in their pursuit of financial versus non‐financial goals (e.g., Gómez‐Mejía, Takacs‐Haynes, Nuñez‐Nickel, Jacobson, & Moyanto‐Fuentes, ).…”

Section: Introductionmentioning

confidence: 99%

“…Moreover, differences in terms of the institutional context from which shareholders originate have been shown to affect governance issues, such as the focus on shareholder value maximization (Fiss & Zajac, ) and the use of independent auditors (Desender, Aguilera, López Puertas‐Lamy, & Crespí, ), as well as organizational structure (Zattoni, ), corporate refocusing (David, O'Brien, Yoshikawa, & Delios, ; Kavadis & Castañer, ), restructuring (Ahmadjian & Robinson, ; Kavadis & Castañer, ), and internationalization (Filatotchev, Stephan, & Jindra, ).…”

Section: Introductionmentioning

confidence: 99%