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Family Firms and Financial Performance: The Cost of Growing

Maximiliano González, Alexander Guzmán, Carlos Pombo () and María Andréa Trujillo
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Maximiliano González: School of Management, Universidad de Los Andes
Alexander Guzmán: CESA
María Andréa Trujillo: CESA

No 32, Galeras. Working Papers Series from Universidad de Los Andes. Facultad de Administración. School of Management

Abstract: This study examines the relationship between financial performance and family involvement for 523 listed and non–listed Colombian firms from 1996-2006. Using a detailed database and performing several panel data regression models, we have found that family firms exhibit better financial performance on average than non-family firms when the founder is still involved in operations, although this effect decreases with firm size. With heirs in charge, there is no statistical difference in financial performance. Both direct and indirect ownership (control through pyramidal ownership structures within family business groups) affect a firm’s financial performance positively. However, this positive effect decreases with firm size, and some kinds of family involvement appear to make firm growth expensive.

Keywords: Family businesses; family control; capital structure; Colombia (search for similar items in EconPapers)
JEL-codes: G3 G32 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2011-06-02
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Journal Article: Family firms and financial performance: The cost of growing (2012) Downloads
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