Does a Family-Controlled Firm Perform Better in Corporate Venturing?

This study investigates the relationship between family-controlled business and stock market reactions to venturing announcements. Prior studies suggested that family-controlled business might involve both costs and benefits, and the results so far have been inconclusive. With a large proportion of listed corporations that have a family-controlled ownership structure, we found that such businesses in Taiwan experienced more negative market valuation of venturing announcements. The empirical results further indicated that the divergence of cash flow and voting rights was strongly and negatively associated with stock market reactions, suggesting that market participants may perceive family-controlled businesses as using corporate venturing to pursue self-interest at the expense of other shareholders. We also found that the participation of institutional ownership mitigated the negative influence of family control