Does family ownership impact positively on firm value? Empirical evidence from Western Europe

Julio Pindado, Ignacion Requejo () and Chabela de la Torre ()
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Ignacion Requejo: Departamento de Administraci¢n y Econom¡a de la Empresa, Facultad de Econom¡a y Empresa, Universidad de Salamanca, http://www.campus.usal.es/~empresa/09_depto/
Chabela de la Torre: Departamento de Administraci¢n y Econom¡a de la Empresa, Facultad de Econom¡a y Empresa, Universidad de Salamanca, http://web.usal.es/~chabela/

No 2008-02, Working Papers "New Trends on Business Administration". Documentos de Trabajo "Nuevas Tendencias en Dirección de Empresas". from Interuniversity Research Master and Doctorate Program (with a quality mention of ANECA) on "Business Economics", Universities of Valladolid, Burgos, Salamanca and León (Spain). Until 2008, Interuniversity Doctorate Program (with a quality mention of ANECA) “New trends in Business Administration”, Universities of Valladolid, Burgos, and Salamanca (Spain). Master en Investigación y Programa de Doctorado Interuniversitarios (con mención de calidad de la ANECA) en "Economía de la Empresa", Universidades de Valladolid, Burgos, Salamanca y León (España). Hasta 2008, Programa de Doctorado Interuniversitario (con mención de calidad de la ANECA) “Nuevas Tendencias en Dirección de Empresas”, Universidades de Valladolid, Burgos y Salamanca (España).

Abstract: Given the importance of family firms all over the world, our main objective is to study whether ownership concentration in the hands of family owners contributes to increase the market value of the firm. Additionally, we analyze whether family firms outperform nonfamily corporations. The estimation of our models by using the Generalized Method of Moments provides interesting results. We find that family ownership positively impacts on firm value. Nevertheless, when ownership concentration in the hands of the family is too high, firm value decreases; thus giving rise to a non-linear relation between family ownership concentration and firm value. Moreover, our results show that young family firms perform better than old ones. Finally, we find that family firms are superior performers to non-family ones, even when nonlinearities are taken into account; but the better performance is primarily due to young family corporations. Overall, the empirical evidence provided supports a positive impact of family ownership on firm value, supporting the idea that family control may be beneficial to minority shareholders

Keywords: family firm; ownership concentration; firm value. (search for similar items in EconPapers)
JEL-codes: G32 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2008-04
New Economics Papers: this item is included in nep-bec, nep-cfn and nep-eec
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More papers in Working Papers "New Trends on Business Administration". Documentos de Trabajo "Nuevas Tendencias en Dirección de Empresas". from Interuniversity Research Master and Doctorate Program (with a quality mention of ANECA) on "Business Economics", Universities of Valladolid, Burgos, Salamanca and León (Spain). Until 2008, Interuniversity Doctorate Program (with a quality mention of ANECA) “New trends in Business Administration”, Universities of Valladolid, Burgos, and Salamanca (Spain). Master en Investigación y Programa de Doctorado Interuniversitarios (con mención de calidad de la ANECA) en "Economía de la Empresa", Universidades de Valladolid, Burgos, Salamanca y León (España). Hasta 2008, Programa de Doctorado Interuniversitario (con mención de calidad de la ANECA) “Nuevas Tendencias en Dirección de Empresas”, Universidades de Valladolid, Burgos y Salamanca (España). Contact information at EDIRC.
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