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      The value of shareholder rights in family firms: Global evidence from a death in the family

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      Author(s)
      Günsür, Başak Tanyeri
      Alp, Ezgi
      Date
      2022-08-09
      Source Title
      Corporate Governance: An International Review
      Electronic ISSN
      1467-8683
      Publisher
      John Wiley & Sons Ltd.
      Pages
      1 - 22
      Language
      English
      Type
      Article
      Item Usage Stats
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      Abstract
      Research Question: How does the protection of shareholder rights affect the pricing of family firms? Research Findings: Investor reaction to a death in the family, measured using abnor-mal stock returns, averages 0.58% and is significant. Investors perceive the death to be a value enhancing event with the potential to dilute family control. The positive investor reaction is amplified in countries and periods with weaker protection of shareholder rights. Theoretical Implications: External and internal corporate governance mechanisms limit the extent to which majority shareholders can take actions that hurt firm value. As such, investor perceptions of how faithfully their interests are protected depend on the extent to which legal rules protect shareholder rights. Policy Implications: Investors pay attention to the regulatory environment of the country, as well as corporate governance in the firm when evaluating agency costs. Our research has important policy implications because we show how better protec-tion of shareholder rights affects the pricing and hence the funding costs of family firms.
      Keywords
      Corporate governance
      Family firms
      Internal and external corporate governance
      Incentive conflicts between the family and outside shareholders
      Law and finance nexus
      Permalink
      http://hdl.handle.net/11693/111486
      Published Version (Please cite this version)
      https://doi.org/10.1111/corg.12484
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      • Department of Management 639
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