Heterogeneity, institutional ownership and family ownership: The case for strategic and organizational restructuring

This paper deals with the corporate restructuring of family firms when targeted by institutional investors. The growth of institutional stock ownership around the world has started to affect also family firms, whose concentration of ownership and control traditionally avoids agency costs and ensures a strong monitoring over the management. The presence of institutional investors in family firms is a way of promoting corporate restructuring and restores active governance by changes in ownership, finance and incentive. As a consequence, firm profitability might benefit from the presence of such new corporate owners. However, in this paper we assume that both the governance devices introduced by institutional investors and those maintained by family owners have a moderate effect on the positive relationship between institutional stock ownership and corporate restructuring.