The Effect of Family Control on Firm Value and Performance: Evidence from Continental Europe

Roberto Barontini and Lorenzo Caprio

European Financial Management, 2006, vol. 12, issue 5, 689-723

Abstract: We investigate the relation between ownership structure and firm performance in Continental Europe, using data from 675 publicly traded corporations in 11 countries. Although family‐controlled corporations exhibit larger separation between control and cash‐flow rights, our results do not support the hypothesis that family control hampers firm performance. Valuation and operating performance are significantly higher in founder‐controlled corporations and in corporations controlled by descendants who sit on the board as non‐executive directors. When a descendant takes the position of CEO, family‐controlled companies are not statistically distinguishable from non‐family firms in terms of valuation and performance.

Date: 2006
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