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The value of family control during political uncertainty: Evidence from Thailand's constitutional change in 20141

Journal Article


Abstract


  • © 2020 Elsevier B.V. We examine the effect of family control on firm value and corporate decision during Thailand's constitutional change arising from the 2014 coup d'état. We find that Thai family firms perform poorly when compared to non-family firms during the period of political uncertainty. The effect is more pronounced when firms have high expected agency costs from outside investors. Further, we find that family firms delay their investments, hold less cash, pay smaller dividends and have poorer access to debt financing sources relative to non-family firms. The reductions in investment and financing activities may at least partially account for their underperformance. Our evidence is consistent with the view that family control enhances firms' survivorship by establishing political connections in times of political uncertainty at the expense of minority shareholders.

Publication Date


  • 2020

Citation


  • Swanpitak, T., Pan, X. & Suardi, S. (2020). The value of family control during political uncertainty: Evidence from Thailand's constitutional change in 20141. Emerging Markets Review,

Scopus Eid


  • 2-s2.0-85089453638

Place Of Publication


  • Netherlands

Abstract


  • © 2020 Elsevier B.V. We examine the effect of family control on firm value and corporate decision during Thailand's constitutional change arising from the 2014 coup d'état. We find that Thai family firms perform poorly when compared to non-family firms during the period of political uncertainty. The effect is more pronounced when firms have high expected agency costs from outside investors. Further, we find that family firms delay their investments, hold less cash, pay smaller dividends and have poorer access to debt financing sources relative to non-family firms. The reductions in investment and financing activities may at least partially account for their underperformance. Our evidence is consistent with the view that family control enhances firms' survivorship by establishing political connections in times of political uncertainty at the expense of minority shareholders.

Publication Date


  • 2020

Citation


  • Swanpitak, T., Pan, X. & Suardi, S. (2020). The value of family control during political uncertainty: Evidence from Thailand's constitutional change in 20141. Emerging Markets Review,

Scopus Eid


  • 2-s2.0-85089453638

Place Of Publication


  • Netherlands