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Did family firms perform better during the financial crisis? New insights from the S&P 500 firms

Haoyong Zhou, Fan He and Yangbo Wang

Global Finance Journal, 2017, vol. 33, issue C, 88-103

Abstract: This paper provides new evidence on whether family firms performed better during the global financial crisis (2008–2010). Using the dataset of the S&P 500 nonfinancial firms during the period 2006–2010, we find that family firms outperformed nonfamily firms during the crisis. Among family firms, the ones that contributed to the outperformance were those where the founder was still present. We also find that during the global financial crisis, founder firms invested significantly less and had better access to the credit market than nonfamily firms. Our analysis suggests that the superior performance of founder firms is largely caused by their having less incentive to overinvest in order to boost short-term earnings during the crisis.

Keywords: Family firms; Performance; Founder; Corporate governance; Financial crisis (search for similar items in EconPapers)
JEL-codes: G01 G14 G32 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:glofin:v:33:y:2017:i:c:p:88-103