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Family Firms & Diversification Through M&A: Evidence From Norway

Andsten, Filip Sander; Lee, Tonje Ying
Master thesis
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http://hdl.handle.net/11250/2625288
Date
2019
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  • Master of Science [1117]
Abstract
This study examines the behavior of family firms on whether they are more

inclined to engage in diversifying M&As than non-family firms due to their high

value of control. To analyse this theory, data has been manually collected where

ownership, deal, and financial data were available, for completed M&A

transactions in Norway from 2000 through 2018. First, we find evidence that

family firms are more inclined to pursue diversifying acquisitions. However, we

find no significant evidence that family firms with a high value of control, proxied

by their leverage, are more inclined to undertake diversifying M&As. Second,

when restricting the transactions to only cash financing, it is clear that family

firms are still willing to engage in diversifying acquisitions, and significant ly

more inclined when the value of control increases. Third, we find no significant

proof that family firms have a higher preference to issue long-term debt than

short-term debt. Finally, we implement additional robustness regression, with an

alternative family firm definition. Based on these results, the study shows an

increase in significance for most of the findings, which provides a better

understanding of family firm’s behavior in terms of their value of control.

Keywords: Family firms, M&A, acquisitions, leverage, diversification, control

motives, method of payment.

JEL classification: G32, G34.
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Masteroppgave(MSc) in Master of Science in Finance - Handelshøyskolen BI, 2019
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Handelshøyskolen BI

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