The Effect of Family Control on Firm Value and Performance: Evidence from Continental Europe

35 Pages Posted: 23 Oct 2006

See all articles by Roberto Barontini

Roberto Barontini

Scuola Superiore Sant'Anna di Pisa - Institute of Management

Lorenzo Caprio

Università Cattolica del Sacro Cuore, Milano

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Abstract

We investigate the relation between ownership structure and firm performance in Continental Europe, using data from 675 publicly traded corporations in 11 countries. Although family-controlled corporations exhibit larger separation between control and cash-flow rights, our results do not support the hypothesis that family control hampers firm performance. Valuation and operating performance are significantly higher in founder-controlled corporations and in corporations controlled by descendants who sit on the board as non-executive directors. When a descendant takes the position of CEO, family-controlled companies are not statistically distinguishable from non-family firms in terms of valuation and performance.

Suggested Citation

Barontini, Roberto and Caprio, Lorenzo, The Effect of Family Control on Firm Value and Performance: Evidence from Continental Europe. European Financial Management, Vol. 12, No. 5, pp. 689-723, November 2006 , Available at SSRN: https://ssrn.com/abstract=939084 or http://dx.doi.org/10.1111/j.1468-036X.2006.00273.x

Roberto Barontini (Contact Author)

Scuola Superiore Sant'Anna di Pisa - Institute of Management ( email )

Piazza Martiri della Libertà, 24
Pisa, Pisa 56124
Italy
++39 050 883.111 (Phone)

Lorenzo Caprio

Università Cattolica del Sacro Cuore, Milano ( email )

Largo Gemelli, 1
Milan, Milan 20122
Italy
02 7234.2768 (Phone)

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