Family Performance Following Share Repurchases, Information Asymmetry and Interest Alignment

We examine the association between family firms, free cash flow and the long-term performance following share repurchase announcements. We find that family firms have better performance than non-family firms. We also find that free cash flow is positively associated with performance, and the association between performance and free cash flow is weaker for family firms than for non-family firms. Furthermore, these findings become increasingly significant when family controllers have a lower degree of involvement. Our results indicate that family firms, especially those with a lower degree of controller involvement, prefer repurchases to mitigate information asymmetry and increase interest alignment