The authors wish to thank Martin Conyon (the Associate Editor), Sebastian Stegmann (the Managing Editor) and three anonymous referees for helpful comments and suggestions. Seminar participants at the 2007 Academy of Management Conference provided many valuable comments. Shao-Chi Chang acknowledges funding from the National Science Council in Taiwan (NSC 96-2416-H-006-025-MY3).
Family Control and Stock Market Reactions to Innovation Announcements
Version of Record online: 20 FEB 2009
© 2009 British Academy of Management
British Journal of Management
Volume 21, Issue 1, pages 152–170, March 2010
How to Cite
Chang, S.-C., Wu, W.-Y. and Wong, Y.-J. (2010), Family Control and Stock Market Reactions to Innovation Announcements. British Journal of Management, 21: 152–170. doi: 10.1111/j.1467-8551.2008.00618.x
- Issue online: 18 FEB 2010
- Version of Record online: 20 FEB 2009
Although family firms are common around the world, studies on family-controlled business are limited. Prior studies mainly focused on the influences of family ownership on overall firm performance, and the results were mixed. In this study we attempted to explore the impacts of family ownership on innovation by examining the association of family control and stock market reactions to innovation announcements. We found that firms with greater family control experienced significantly more negative stock market reactions to innovation announcements. The results further indicated that divergence of cash flow and voting rights was strongly and negatively correlated with announcement-period abnormal returns. In addition, the findings suggested a significantly positive moderating effect of institutional ownership. The conclusions were robust under various measures of family control, and remained valid after controlling other influential factors for stock market reactions to innovation announcements.