The impact of control structures on firm value

The purpose of this study is to investigate the impact of control structures on the value of family-controlled firms in Turkiye, an emerging market. Turkish firms are usually affiliated with family-controlled business groups. Families control business group firms through pyramid structures and dual-class shares, which results in a control-ownership rights wedge. In this study, I use precise quantitative measures for the control-voting rights wedge (pyramid wedge) and the voting-ownership rights wedge (dual-share wedge) to analyze the impact of control-enhancing mechanisms on firm valuation. The empirical results of the panel data estimation indicate a negative relationship between firm value and the control-voting rights wedge. However, the voting-ownership rights wedge does not affect firm valuation. This study also shows that foreign-family coalition and CEO duality have a positive impact on firm value.