Good deal or bad deal? A meta-analysis of acquiring family firms and M&A performance

Abstract

Family firms have often been portrayed as being distinct from non-family firms in their pursuit of M&A and their performance thereof. Empirical research examining whether family firms perform better or worse than non-family firms in M&A has, however, yielded conflicting findings and sparked controversy among scholars. To extend this stream of research, we theorize that family firms, based on their wealth concentration in the firm, reduced agency costs, and their pursuit of socio-emotional wealth goals, outperform non-family firms in M&A. Meta-analytic results from 40 primary studies covering over 20 years of research and 50 different countries support our hypothesis. We further argue and empirically show that the observed positive effect is weaker when family members take on board positions and conduct industry-diversifying M&A. Moreover, our findings emphasize that the family firm status and M&A performance relationship is contingent on the institutional environment of the family firm’s home country, examined through the country’s ease of doing business and education level of the workforce.