The Impact of Family Control on Investors' Risk and Performance of Italian Listed Companies

27 Pages Posted: 27 Nov 2007

See all articles by Giovanni Fiori

Giovanni Fiori

Luiss Guido Carli University

Riccardo Tiscini

Universitas Mercatorum

Francesca di Donato


Date Written: July 7, 2007


Agency costs, deriving from the separation between ownership and control, affect whatever company model. In case of firms with dispersed ownership (the public companies), the classic agency conflict regards the relation between shareholders and managers.

In case of family firms the classic agency conflicts are mitigated thanks to reduced separation between ownership and control, but there are other types of agency conflicts, moreover between family shareholders and minority ones.

This paper focuses on the relation between agency costs and ownership structure, in the specific perspective of minority shareholders, providing a first empirical evidence of the proposition that family ownership reduces the agency costs of equity and has a negative effect on the equity risk perceived by the market.

The analysis statistically compares family and non-family firms, sorted from Italian listed companies, in any sector with a significant presence of family business, to get evidence of family's ownership impact on equity cost of capital.

Keywords: agency costs, Family firms, Corporate governance, firms performance

Suggested Citation

Fiori, Giovanni and Tiscini, Riccardo and di Donato, Francesca, The Impact of Family Control on Investors' Risk and Performance of Italian Listed Companies (July 7, 2007). Available at SSRN: or

Giovanni Fiori (Contact Author)

Luiss Guido Carli University ( email )

viale Pola 12
Roma, Roma 00198

Riccardo Tiscini

Universitas Mercatorum ( email )

Via Appia Pignatelli, 62
Rome, 00178

Francesca Di Donato

UNINT ( email )

Via Cristoforo Colombo 200
Roma, Roma 00100

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