Founding family ownership, stock market returns, and agency problems

Nicolas Eugster and Dusan Isakov

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Abstract: 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 firm characteristics and risk factors. Family firms generate an annual abnormal return of 2.8% to 7.1%. We also document that family firms potentially having more agency problems earn higher abnormal returns. Our evidence suggests that outside investors receive a premium for holding shares of these firms as they are exposed to the specific agency problems present in family firms.

Keywords: Family firm; Ownership structure; Abnormal returns; Performance; Earnings surprise (search for similar items in EconPapers)
Date: 2019-10
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Citations: View citations in EconPapers (6)

Published in Journal of Banking & Finance, 2019, 107, pp.105600. ⟨10.1016/j.jbankfin.2019.07.020⟩

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Related works:
Journal Article: Founding family ownership, stock market returns, and agency problems (2019)
Working Paper: Founding family ownership,stock market returns, and agency problems (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02511063

DOI: 10.1016/j.jbankfin.2019.07.020

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