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Does family ownership matter? Evidence of the payment method and market reaction to M&A deals in Taiwan

Lookup NU author(s): Dr Yousry AhmedORCiD

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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License (CC BY-NC 4.0).

Abstract

Abstract Purpose – This paper examines the effect of family ownership on the payment method of mergers and acquisitions (M&A) deals. It also investigates the market reaction around the announcement of these M&A deals. Design/methodology/approach – Archival data of M&A deals of a sample of Taiwanese listed firms during 2008-2018 are collected and examined using probit, event study and OLS models. We address the endogeneity concern using the two-stage least squares (2SLS) statistical technique and Heckman’s two-step estimation method. Findings – We find that family firms are more likely to use cash as an exchange medium in M&A deals to avoid the problem of diluting control rights. We further find that family firms receive a positive market reaction around the announcement of M&A deals relative to non-family counterparts. Our empirical results support the notion that family ownership is a value-creation structure. Practical implications – Our findings provide additional evidence-based insights into the debate about family ownership with the aim of informing policy and offering practical recommendations to expand the US-based literature. Originality/value – To the best of our knowledge, this is the first study to provide empirical evidence on the impact of family ownership on payment method choice in M&A activities in Taiwan. It also provides novel evidence that family firms experience value gains when taking M&A investment decisions relative to non-family firms.

Publication metadata

Author(s): Ahmed Y, Elsayed M, Chen Y

Publication type: Article

Publication status: Published

Journal: International Journal of Accounting and Information Management

Year: 2023

Volume: 31

Issue: 3

Pages: 440-454

Online publication date: 23/03/2023

Acceptance date: 17/02/2023

Date deposited: 18/02/2023

ISSN (print): 1834-7649

ISSN (electronic): 1758-9037

Publisher: Emerald Publishing Limited

URL: https://doi.org/10.1108/IJAIM-10-2022-0231

DOI: 10.1108/IJAIM-10-2022-0231

ePrints DOI: 10.57711/bxbq-wc91

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