How Are U.S. Family Firms Controlled

  title={How Are U.S. Family Firms Controlled},
  author={B. Villalonga and R. Amit},
  journal={Review of Financial Studies},
  • B. Villalonga, R. Amit
  • Published 2009
  • Economics
  • Review of Financial Studies
  • In large U.S. corporations, founding families are the only blockholders whose control rights on average exceed their cash-flow rights. We analyze how they achieve this wedge, and at what cost. Indirect ownership through trusts, foundations, limited partnerships, and other corporations is prevalent but rarely creates a wedge (a pyramid). The primary sources of the wedge are dual-class stock, disproportionate board representation, and voting agreements. Each control-enhancing mechanism has a… CONTINUE READING
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