'Running in the Family': The Evolution of Ownership, Control, and Performance in German Family-Owned Firms, 1903-2003

45 Pages Posted: 16 Mar 2006

See all articles by Eric Nowak

Eric Nowak

Swiss Finance Institute; University of Lugano

Olaf Ehrhardt

University of Applied Sciences Stralsund

Felix Michael Weber

Elephant Equity

Date Written: September 15, 2006

Abstract

In this study we analyze the evolution of ownership, control, and performance in German founding-family-owned firms over the last century. We employ a hand-collected matched sample of German stock companies founded before World War I and still in existence in 2003. Comparing family-owned and non-family-owned firms over the 100-year time-span, we are able to analyze a variety of variables including ownership, control, industries, bank relationships and performance, as well as the impact of intergenerational control transfers. We find that families are slow to give up ownership, and control of family businesses remains strong even after several generations. Family firms seem to outperform non-family firms in terms of operating performance, but performance declines over the generations.

Keywords: Family firms, performance, ownership, control, German stock markets

JEL Classification: G32, N23, N24

Suggested Citation

Nowak, Eric and Ehrhardt, Olaf and Weber, Felix Michael, 'Running in the Family': The Evolution of Ownership, Control, and Performance in German Family-Owned Firms, 1903-2003 (September 15, 2006). Swiss Finance Institute Research Paper No. 06-13. Available at SSRN: https://ssrn.com/abstract=891255 or http://dx.doi.org/10.2139/ssrn.891255

Eric Nowak (Contact Author)

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

University of Lugano ( email )

Via Buffi 13
CH-6900 Lugano
Switzerland
+41-91-9124-637 (secr. -712) (Phone)
+41-91-9124-647 (Fax)

Olaf Ehrhardt

University of Applied Sciences Stralsund ( email )

Zur Schwedenschanze 15
D-18435 Stralsund
United States

Felix Michael Weber

Elephant Equity ( email )

Munich
Germany

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