Family Values: Ownership Structure, Performance and Capital Structure of Canadian Firms

Michael King and Eric Santor ()

Staff Working Papers from Bank of Canada

Abstract: This study examines how family ownership affects the performance and capital structure of 613 Canadian firms using a panel dataset from 1998 to 2005. In particular, we distinguish the effect of family ownership from the use of control-enhancing mechanisms. We find that freestanding family-owned firms with a single share class have similar market performance than other firms based on Tobin's q ratios, superior accounting performance based on ROA, and higher financial leverage based on debt-to-total assets. By contrast, family-owned firms that use dual-class shares have valuations that are lower by 17% on average relative to widely-held firms, despite having similar ROA and financial leverage. Finally, concentrated ownership by either a corporation or a financial institution does not significantly affect firm performance.

Keywords: Financial markets; International topics (search for similar items in EconPapers)
JEL-codes: G12 G15 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2007
New Economics Papers: this item is included in nep-bec and nep-eff
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Citations: View citations in EconPapers (8)

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Journal Article: Family values: Ownership structure, performance and capital structure of Canadian firms (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:07-40

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