The Performance of Italian Family Firms

34 Pages Posted: 21 Jul 2006  

Fausto Panunzi

Bocconi University - Department of Economics; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Carlo A. Favero

Bocconi University - Department of Finance; Centre for Economic Policy Research (CEPR)

Stefano Giglio

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Maddalena Honorati

Università Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER)

Multiple version iconThere are 2 versions of this paper

Date Written: July 2006

Abstract

In this paper, we study the performance of Italian listed family firms in the period 1998-2003. We measure their performance by using both accounting and market data. We first study the relative performance of family firms compared to widely held firms. Then we investigate whether performance is affected by the type of family firm (i.e., whether the CEO is a member of the family or is an outsider). We find that the data and the methodology used to measure performance strongly affect the results. When performance is measured by accounting data (ROA), using a static model, we find evidence in favor of a superior performance of family firms. Such evidence is not confirmed by the application of the same model to market measures of performance. However, we report statistical evidence that the correct econometric specification for market data is a dynamic model. The results of estimation of the dynamic model for the market measures of performance are more consistent with those based on the static model for the accounting measures of performance.

Keywords: Family firms, corporate performance, management style

JEL Classification: G32

Suggested Citation

Panunzi, Fausto and Favero, Carlo A. and Giglio, Stefano and Honorati, Maddalena, The Performance of Italian Family Firms (July 2006). ECGI - Finance Working Paper No. 127/2006. Available at SSRN: https://ssrn.com/abstract=918181 or http://dx.doi.org/10.2139/ssrn.918181

Fausto Panunzi (Contact Author)

Bocconi University - Department of Economics ( email )

Via Roentgen 1
20136 Milan
Italy
+39 02 5836 5327 (Phone)
+39 02 5836 5343 (Fax)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Carlo A. Favero

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

HOME PAGE: http://www.igier.unibocconi.it\favero

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Stefano Giglio

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Maddalena Honorati

Università Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER) ( email )

Via Sarfatti 25
20136 Milan, MI 20136
Italy

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