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Journal of Management and Governance
Published in: Journal of Management and Governance 4/2018

19-02-2018

Ownership structure, investors’ protection and corporate valuation: the effect of judicial system efficiency in family and non-family firms

Authors: Luigi Lepore, Francesco Paolone, Domenico Rocco Cambrea

Published in: Journal of Management and Governance | Issue 4/2018

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Abstract

Research on the effect of ownership structure on firm performance shows no convergent evidence concerning the sign and form of the above-mentioned relationship. Similarly, there is no homogeneous evidence documenting family ownership concentration is always positively or negatively correlated with firm value, or irrelevant. This paper analyses whether and how the de facto investor protection provided by the judicial system affects the relationship between corporate performance and ownership structure in 1314 firms operating in four European countries (Germany, France, Italy, and Spain) over a five-year period, 2010–2014. Moreover, we analyse whether judicial system efficiency influences if and how family firms in the controlling coalition collude for expropriating minority shareholders. Our findings show that the level of shareholder protection, derived from judicial efficiency, is relevant to the relationship between ownership structure and firm performance, thus corroborating literature in that institutional contexts matter in explaining such relations. The results suggest the need for more efficient external mechanisms of corporate governance to facilitate investment in equity capital, thus decreasing the country risk perceived by investors.
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Footnotes
1
Testparm is a joint test to determine whether the dummies for all years are equal to zero.
 
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Metadata
Title
Ownership structure, investors’ protection and corporate valuation: the effect of judicial system efficiency in family and non-family firms
Authors
Luigi Lepore
Francesco Paolone
Domenico Rocco Cambrea
Publication date
19-02-2018
Publisher
Springer US
Published in
Journal of Management and Governance / Issue 4/2018
Print ISSN: 1385-3457
Electronic ISSN: 1572-963X
DOI
https://doi.org/10.1007/s10997-018-9405-0

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