Family Versus Institutional Involvement in Restructuring: Evidence From the Communications Equipment Industry

The prospect of restructuring can be seen as a mixed gamble that creates tensions between family owners and institutional investors in publicly traded firms. Both sides diverge in their reference points as family owners will pursue noneconomic goals, while institutional owners will pursue economic goals. We develop and test arguments to predict how resistance from family owners and support from institutional owners affect a firm’s restructuring. Using panel data from 1990 to 2004, the findings support our predictions and show that family owners can achieve both economic and noneconomic goals post-restructuring.