Table 8. Endogeneity of founding family...

Table 8.

Endogeneity of founding family firms – propensity score matching

	Cash		CashToNetAssets
Dependent variable	(1)	(2)	(3)	(4)
LMR	–0.006** (−2.80)	–0.006** (−2.53)	–0.024** (−2.29)	–0.033*** (−4.84)
LMR#FFF	0.009*** (4.67)	0.010*** (11.73)	0.029*** (3.78)	0.034*** (9.79)
FFF	–0.035** (−2.19)	–0.034* (−1.87)	–0.136** (−2.86)	–0.154** (−2.97)
Size $_{(t - 1)}$	–0.001 (−0.12)	–0.007 (−1.01)	0.029** (2.39)	0.023 (0.60)
Growth $_{(t - 1)}$	0.002 (0.78)	0.003 (1.25)	0.008 (0.71)	0.013 (0.86)
Leverage $_{(t - 1)}$	–0.095*** (−8.38)	–0.123*** (−5.82)	–0.226*** (−4.81)	–0.317*** (−6.00)
NWC $_{(t - 1)}$	–0.061** (−2.37)	–0.067 (−1.42)	–0.169** (−2.49)	–0.194 (−1.52)
Investments $_{(t - 1)}$	–0.063** (−2.75)	–0.048 (−1.69)	–0.192** (−2.72)	–0.175* (−2.05)
Dividends $_{(t - 1)}$	0.006** (2.57)	0.004* (1.82)	0.007 (1.55)	0.001 (0.19)
Cash flow $_{(t - 1)}$	0.035** (2.42)	0.023 (1.19)	0.063 (1.19)	0.038 (0.47)
Cash flow volatility $_{(t - 1)}$	0.021*** (3.17)	0.015*** (3.30)	0.102** (2.28)	0.074** (2.40)
Other ultimate owner	–0.006 (−1.61)	–0.013 (−1.64)	–0.042** (−2.38)	–0.075*** (−3.58)
Inflation $_{(t - 1)}$	–0.043 (−0.26)	–0.282 (−1.16)	0.593 (1.29)	1.204* (1.97)
GDP growth $_{(t - 1)}$	–0.074 (−1.54)	–0.085 (−1.13)	–0.030 (−0.12)	0.014 (0.07)
ln(GDP p.c.) $_{(t - 1)}$	0.057* (1.79)	0.146** (2.90)	0.020 (0.17)	0.099 (1.17)
Caliper	No	0.0001	No	0.0001
Firm fixed effects	Yes	Yes	Yes	Yes
Industry-Year fixed effects	Yes	Yes	Yes	Yes
Country specific year trend	Yes	Yes	Yes	Yes
Clustered standard errors	Country-level	Country-level	Country-level	Country-level
Observations	12,426	6,996	12,426	6,996
$R_{a d j}^{2}$	0.076	0.123	0.049	0.080

	Cash		CashToNetAssets
Dependent variable	(1)	(2)	(3)	(4)
LMR	–0.006** (−2.80)	–0.006** (−2.53)	–0.024** (−2.29)	–0.033*** (−4.84)
LMR#FFF	0.009*** (4.67)	0.010*** (11.73)	0.029*** (3.78)	0.034*** (9.79)
FFF	–0.035** (−2.19)	–0.034* (−1.87)	–0.136** (−2.86)	–0.154** (−2.97)
Size $_{(t - 1)}$	–0.001 (−0.12)	–0.007 (−1.01)	0.029** (2.39)	0.023 (0.60)
Growth $_{(t - 1)}$	0.002 (0.78)	0.003 (1.25)	0.008 (0.71)	0.013 (0.86)
Leverage $_{(t - 1)}$	–0.095*** (−8.38)	–0.123*** (−5.82)	–0.226*** (−4.81)	–0.317*** (−6.00)
NWC $_{(t - 1)}$	–0.061** (−2.37)	–0.067 (−1.42)	–0.169** (−2.49)	–0.194 (−1.52)
Investments $_{(t - 1)}$	–0.063** (−2.75)	–0.048 (−1.69)	–0.192** (−2.72)	–0.175* (−2.05)
Dividends $_{(t - 1)}$	0.006** (2.57)	0.004* (1.82)	0.007 (1.55)	0.001 (0.19)
Cash flow $_{(t - 1)}$	0.035** (2.42)	0.023 (1.19)	0.063 (1.19)	0.038 (0.47)
Cash flow volatility $_{(t - 1)}$	0.021*** (3.17)	0.015*** (3.30)	0.102** (2.28)	0.074** (2.40)
Other ultimate owner	–0.006 (−1.61)	–0.013 (−1.64)	–0.042** (−2.38)	–0.075*** (−3.58)
Inflation $_{(t - 1)}$	–0.043 (−0.26)	–0.282 (−1.16)	0.593 (1.29)	1.204* (1.97)
GDP growth $_{(t - 1)}$	–0.074 (−1.54)	–0.085 (−1.13)	–0.030 (−0.12)	0.014 (0.07)
ln(GDP p.c.) $_{(t - 1)}$	0.057* (1.79)	0.146** (2.90)	0.020 (0.17)	0.099 (1.17)
Caliper	No	0.0001	No	0.0001
Firm fixed effects	Yes	Yes	Yes	Yes
Industry-Year fixed effects	Yes	Yes	Yes	Yes
Country specific year trend	Yes	Yes	Yes	Yes
Clustered standard errors	Country-level	Country-level	Country-level	Country-level
Observations	12,426	6,996	12,426	6,996
$R_{a d j}^{2}$	0.076	0.123	0.049	0.080

Note(s):

This table presents the OLS regression results of the FFF-related differential effect of LMR on cash holdings using a propensity score matched sample. For each FFF observation non-FFF observations in the same country were matched (nearest neighbor matching, without replacement) using the Fama-French 30 industry classification and the firm level variables Size, Leverage, Investments and ln (1 + FirmAge). Column 1 (2) shows the results for Cash (CashToNetAssets) without a caliper restriction. Column 3 (4) shows the results for Cash (CashToNetAssets) using a caliper restriction of 0.0001. All variables are defined in Table A1 in the Appendix. All independent variables except LMR, FFF, and Other Ultimate Owner are lagged by one period. All regression specifications include firm fixed effects, industry-year fixed effects, and country specific year trends. The t-Statistics in parentheses are based on robust standard errors, clustered at the country level. *, **, *** denote statistical significance at the 10, 5, and 1% levels, respectively

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