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Effects of family control on the degree and type of diversification: Empirical evidence for business groups
Author(s) -
HernándezTrasobares Alejandro,
GalveGórriz Carmen
Publication year - 2019
Publication title -
thunderbird international business review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.553
H-Index - 37
eISSN - 1520-6874
pISSN - 1096-4762
DOI - 10.1002/tie.22097
Subject(s) - diversification (marketing strategy) , shareholder , family business , socioemotional selectivity theory , business , principal–agent problem , corporate group , empirical evidence , demographic economics , business administration , accounting , marketing , corporate governance , economics , finance , psychology , developmental psychology , philosophy , epistemology
This article analyzes the impact of ownership structure on corporate diversification, with reference to large listed family business groups. By considering agency theory and socioemotional wealth, the study examines the relationship between family ownership, concentration of ownership, and degree and type of diversification. The study considers 99 Spanish listed business groups (50 family‐controlled‐ and 49 nonfamily‐controlled groups) and considers diversification of business group as the focus of analysis. The results show how family business groups present a lower preference for unrelated diversification than related diversification. There is also a nonlinear relationship between the concentration of ownership in family groups and the degree of diversification, showing different behaviors in family groups according to shares owned by the family's leading shareholders. This article contributes to the literature by providing a more precise identification of the corporate strategy adopted by business groups and establishing new evidence about the impact of family control on diversification strategies and the differences regarding nonfamily business groups.