The Benefits of Family Ownership, Control and Management on Financial Performance of Firms

34 Pages Posted: 13 Oct 2010 Last revised: 22 Jul 2011

See all articles by David B. Audretsch

David B. Audretsch

Indiana University - Institute for Development Strategies; King Saud University; WHU - Otto Beisheim School of Management; Indiana University Bloomington - School of Public & Environmental Affairs (SPEA)

Marcel Hülsbeck

University of Augsburg - Faculty of Business and Economics

Erik E. Lehmann

University of Augsburg - Faculty of Business and Economics

Abstract

The benefits of family ownership and control of firms are at the center of the family firm debate. Previous studies have used either family ownership or management as proxies for control. Both indicators are off the mark, as they do not measure ‘decision control’ as intended by the theory of the firm. This is the first study investigating the direct influence of family ownership, control and management on financial firm performance, while controlling for goal heterogeneity of different stakeholders. Our results clearly show that family control is beneficial for all stakeholders, while neither family ownership nor management influences financial performance. Monitoring behavior of families is the central component and essence of family firms and can be used as a point of departure for the development of a unified theory of family firms.

Keywords: Corporate Governance, Family Business, Ownership and Control

JEL Classification: G32, L22, L26

Suggested Citation

Audretsch, David B. and Hülsbeck, Marcel and Lehmann, Erik E., The Benefits of Family Ownership, Control and Management on Financial Performance of Firms. Indiana University-Bloomington School of Public & Environmental Affairs Research Paper No. 2010-10-03. Available at SSRN: https://ssrn.com/abstract=1690963 or http://dx.doi.org/10.2139/ssrn.1690963

David B. Audretsch

Indiana University - Institute for Development Strategies ( email )

1315 East Tenth Street
Bloomington, IN 47405
United States
812-855-6766 (Phone)
812-855-0184 (Fax)

King Saud University ( email )

Riyadh, 11451
Saudi Arabia

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA) ( email )

1315 East Tenth Street
Bloomington, IN 47405
United States

Marcel Hülsbeck (Contact Author)

University of Augsburg - Faculty of Business and Economics ( email )

Universitätsstr. 16
Augsburg, 86159
Germany

Erik E. Lehmann

University of Augsburg - Faculty of Business and Economics ( email )

Universitätsstr. 16
Augsburg, 86135
Germany

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