Edited by Jennifer G. Hill and Randall S. Thomas
Chapter 7: Ownership and control in family business groups around the world
In many financial markets, publicly listed firms are frequently linked together through a common controlling shareholder, often a family. Such family business groups have been identified in the “law and finance” literature as posing a significant risk for minority investors and a manifestation of weak legal and institutional environments underpinning their investments. This study examines the importance of family business groups in individual economies that exhibit varying levels of investor legal protection and financial development. For this analysis, we rely on a new dataset of business group structures from 45 countries first developed in Masulis, Pham and Zein (2011). Expanding on the evidence from Masulis, Pham and Zein (2011), we focus on cross-country variations in family business group control structures and their recent changes in market capitalization and number of affiliated members to further our understanding of why family business groups continue to be economically important and their implications for shareholder protection around the world. We begin by reviewing the current state of the literature on business groups and especially on some key findings in several related studies based on our dataset.
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