Performance of foundation-owned firms in Germany: The role of foundation purpose, stock market listing, and family involvement

Joern Block, Svenja Jarchow, Nadine Kammerlander, Florian Hosseini and Ann-Kristin Achleitner

Journal of Family Business Strategy, 2020, vol. 11, issue 4

Abstract: To address succession issues, the owners of family firms increasingly transfer their equity to family and charitable foundations, thereby creating so-called foundation-owned firms. This form of succession has become increasingly common in various European countries. A small yet insightful stream of research has emerged comparing the performance of foundation-owned firms against the performance of nonfoundation-owned firms. Our study goes one step further and accounts for the heterogeneous nature of foundation-owned firms. We investigate the role of foundation purpose (family versus charitable foundation), stock market listing, and family involvement. Our results show that firms owned by a family foundation have better accounting performance than firms owned by a charitable foundation. We further find a performance-enhancing effect of family involvement in the firm’s management or supervisory board. Contrary to our expectations, we did not observe significant performance differences between private and stock market-listed foundation-owned firms. Our study advances the emergent stream of the foundation-owned (family) firm literature by integrating research on foundation-owned firms with research on family firms. Furthermore, we contribute to the corporate governance literature on ownership effects and blockholder ownership.

Keywords: Foundation-owned firm; Performance; Foundation; Family foundation; Charitable foundation; Family involvement in the firm (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (4)

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DOI: 10.1016/j.jfbs.2020.100356

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