The effect of family control on investment-cash flow sensitivity

This article examines the effect of family control on investment-cash flow sensitivity and distinguishes the effect between agency problems and asymmetric information. Using an unbalanced panel data of 1206 Taiwanese firms for the time period 1999 to 2008, we find that family control increases the i...

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Bibliographic Details
Published in:Applied financial economics 2011-06, Vol.21 (12), p.897-904
Main Authors: Hung, Jung-Hua, Kuo, Yi-Ping
Format: Article
Language:English
Subjects:
Capital investments
Cash flow
Control
Dynamics
Family firms
Family owned businesses
Financial economics
Information
Investment
Studies
Taiwan
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Summary:This article examines the effect of family control on investment-cash flow sensitivity and distinguishes the effect between agency problems and asymmetric information. Using an unbalanced panel data of 1206 Taiwanese firms for the time period 1999 to 2008, we find that family control increases the investment-cash flow sensitivity. In family controlled firms, compared with in firms that are not family controlled, investment is more sensitive to cash flow, which is related to asymmetric information problems.
ISSN:0960-3107
1466-4305
DOI:10.1080/09603107.2010.539533