Control Motivations and Firm Growth
Date: 12 May 2025 11:40-12:40
Location: Corvinus University of Budapest, building E, Institute of Finance – Room E.279.1.
We investigate how the control motivations of large shareholders affect firm growth through their influence on financing decisions. We use family blockholding as our laboratory since these blockholders have strong preferences for keeping a tight grip on firm control. Using data on a large panel of European private firms, we estimate a dynamic model of firm investments, control, and financing decisions, in a setting with financing frictions. We use the model to understand why firms with a control-motivated blockholder grow less compared to firms without such type of shareholders. Our estimates indicate that family blockholders‘ reluctance to give up control explains a significant part of this growth differential.
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