Founding family ownership,stock market returns, and agency problems
Nicolas Eugster () and
Dusan Isakov ()
No 490, FSES Working Papers from Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland
This paper explores the relationship between founding family ownership and stock market returns. Using the entire population of non-financial firms listed on the Swiss stock market for 2003–2013, we find that the stock returns of family firms are significantly higher than those of non-family firms after adjusting the returns for different risk factors and firm characteristics. Family firms generate an annual abnormal return of 2.8% to 7.1%. Moreover, family firms potentially having more agency problems earn higher abnormal returns than other firms and markets participants are regularly positively surprised by the economic outcomes produced by these firms around earnings announcements. The evidence suggests that outside investors earn a premium for bearing the high expropriation risk of family firms.
Keywords: Family firm; ownership structure; earnings surprise; market efficiency (search for similar items in EconPapers)
JEL-codes: G14 G31 (search for similar items in EconPapers)
Pages: 44 pages
New Economics Papers: this item is included in nep-cfn, nep-fmk and nep-sbm
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Journal Article: Founding family ownership, stock market returns, and agency problems (2019)
Working Paper: Founding family ownership, stock market returns, and agency problems (2019)
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