The Performance of Foundation-Owned Companies

31 Pages Posted: 27 Oct 2014

See all articles by Steen Thomsen

Steen Thomsen

Copenhagen Business School

Henry Hansmann

Yale University - Law School; European Corporate Governance Institute (ECGI)

Date Written: October 11, 2013


A number of world class companies – such as the Tata Group, Robert Bosch, and Bertelsmann -- are majority owned by charitable nonprofit foundations. This structure places control of the company in the hands of a self-perpetuating foundation board that is immune to outside discipline through a proxy fight or hostile acquisition, and whose members receive no incentive compensation. Conventional economic theories of corporate governance predict that such companies would be riven with agency costs and therefore highly inefficient. Yet previous studies find that companies owned by industrial foundations seem to perform as well as more conventional investor-owned companies. In this paper we reassess the relative performance of foundation-owned companies by comparing a substantial sample of them from the Nordic countries with various different samples of investor-owned Nordic companies, including matched pairs of companies in the same industry and of comparable size. We find that, overall, foundation-owned companies have similar accounting profitability, take less risk, and grow more slowly than listed investor-owned companies. We offer alternative theories regarding the costs and benefits of foundation ownership that appear consistent with our results.

Suggested Citation

Thomsen, Steen and Hansmann, Henry, The Performance of Foundation-Owned Companies (October 11, 2013). Available at SSRN: or

Steen Thomsen (Contact Author)

Copenhagen Business School ( email )

Porcelaenshaven 24A
Copenhagen, 2000
+45 38152590 (Phone)
+45 38152500 (Fax)

Henry Hansmann

Yale University - Law School ( email )

P.O. Box 208215
New Haven, CT 06520-8215
United States
203-432-4966 (Phone)

European Corporate Governance Institute (ECGI)

B-1050 Brussels


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