Does Family Ownership Create or Destroy Value: Evidence from Canada

International Journal of Managerial Finance, Vol. 9, No. 1, 2013

42 Pages Posted: 23 Dec 2012 Last revised: 22 Mar 2015

See all articles by Heng Du

Heng Du

Concordia University, Quebec - Department of Finance

Kuntara Pukthuanthong

University of Missouri, Columbia

Dolruedee Thiengtham

Concordia University, Quebec - John Molson School of Business; University of Exeter Business School - Department of Finance

Thomas John Walker

Concordia University, Quebec - Department of Finance

Date Written: December 23, 2012

Abstract

This study examines whether and how family ownership enhances or damages firm value using a sample of Canadian companies listed on the Toronto Stock Exchange (TSX) between 1999 and 2007. Our results suggest that family companies are generally superior to non-family companies. In addition, we find that control-enhancing mechanisms which are often employed by family companies add value to companies. Furthermore, we find that agency conflicts between ownership and management are less costly than those between majority and minority shareholders, suggesting that family ownership helps resolve the agency conflicts between ownership and management and in turn enhances firm value. Finally, we find that family companies with founders as CEOs outperform those with descendants as CEOs.

Keywords: family ownership, agency conflicts, firm performance

JEL Classification: G32, G34, K22

Suggested Citation

Du, Heng and Pukthuanthong, Kuntara and Thiengtham, Dolruedee and Walker, Thomas John, Does Family Ownership Create or Destroy Value: Evidence from Canada (December 23, 2012). International Journal of Managerial Finance, Vol. 9, No. 1, 2013, Available at SSRN: https://ssrn.com/abstract=2193226

Heng Du

Concordia University, Quebec - Department of Finance ( email )

Montreal, Quebec H3G 1M8
Canada

Kuntara Pukthuanthong

University of Missouri, Columbia ( email )

Robert J. Trulaske, Sr. College of Business
403 Cornell Hall
Columbia, MO 65211
United States
6198076124 (Phone)

HOME PAGE: https://www.kuntara.net/

Dolruedee Thiengtham

Concordia University, Quebec - John Molson School of Business ( email )

1455 de Maisonneuve Blvd. W.
Montreal, Quebec H3G 1M8
Canada

University of Exeter Business School - Department of Finance

Streatham Court
Exeter, EX4 4PU
United Kingdom

Thomas John Walker (Contact Author)

Concordia University, Quebec - Department of Finance ( email )

Montreal, Quebec H3G 1M8
Canada

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
113
Abstract Views
1,015
rank
303,185
PlumX Metrics