Does Family Involvement in Ownership Affect Profitability and Value of Egyptian Corporations?

Abstract

This study aimed to investigate the effect of family involvement in ownership (FIO) on profitability and value based on a sample of Egyptian corporations. Firm profitability and market valuation were measured by return on total assets (ROA) and Tobin's Q ratio (TQ), respectively. A panel data analysis for 67 Egyptian firms for the period 2010-2018 was employed, and the generalized method of moments (GMM) with fixed-effects estimator was applied to confirm the veracity of the study hypothesis. The research findings demonstrated that profitability and firm value is positively affected by FIO. Hence, the higher the level of FIO, the higher the profitability and market valuation of the firm. The implications of the current research highlight the vital role of FIO as a primary source of equity finance in modern corporations.