Ownership structure and financial performance of small firms in Spain

Tabot, Lious Ntoung Agbor; Ferro‐Soto, Carlos; Outman, Ben Chettah

doi:10.22495/cocv13i4c4p11

Cited by 3 publications

(3 citation statements)

References 15 publications

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“…Other school of thought claim that the most suitable instrument to correct the action of such sulphurous management behaviour is through concentrated ownership, (Ntoung et al 2017, p. 127). For instance, in (Ntoung et al 2016a) (Jensen and Meckling 1976;Sraer and Thesmar 2007) claim that separation between ownership and control can involveimportant costs and problems forshareholders. Their classical agency problem suggests that one way to resolve the conflict of interest between shareholders and managers is to increase the proportion of shares in the hands of the controlling shareholder.…”

Section: Family Control and Firm Valuementioning

confidence: 99%

“…No study so far has provided evidence for the risk profile of Spanish family firms. Meanwhile, other authors have tested ownership as endogenous to obtain theconclusion of there being no significant relationship using either a panel-fixed effect or instrumental variables" (Ntoung et al 2016a).…”

Section: Robustness Testmentioning

confidence: 99%

“…May (1995) posits that the reason behind managers using only approximate time frames in their planning rather than the accurate time forecast is due to the personal risk when making decisions regarding firms risk. De Vries (1993) add that family businesses have a longer-term perspective than non-family businesses, (Oswald and Jahera 1991;Ntoung et al 2016a), which may "improve decision-making resulting in higher earnings and dividends. After controlling for a variety of factors that affect cross-sectional debt levels among all firms", Mishra and McConaughy (1999) conclude that family-controlled firms using less debt.…”

Section: Introduction and Literature Reviewmentioning

confidence: 99%

See 2 more Smart Citations

Are Family Firms Financially Healthier Than Non-Family Firm?

Ntoung

Oliveira

Sousa

et al. 2019

JRFM

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This study examines the whether or not family firms are financially healthier than non-family in terms of capital structure and leverage. It therefore takes into consideration the existence of any significant differences between the leverage and risk choices of family and non-family firms. Using a panel data set of 888 firms and 7104 firm-year observations of unlisted small and medium size firms over the period 2007-2014, we present that family owned businesses have lower financial structure than those of non-family owned businesses. This indicates that most family firms use less debt financing than non-family firms, and as such maintain a lower level of debt. Secondly, family firms demonstrate lower risk as illustrated by the Altman Z-score. The Altman Z-score scale illustrates a contrary relationship of significance with respect to family firms and their counterparts in terms of the operation aspect of the business's risk factors. Family firms managed their business operations with lower risk and are generally healthier financially than their counterpart firms. Lastly, findings from the robust tests for the hypotheses using a sample of bankrupt firms in Iberian Balance sheet Analysis System (SABI) reveal that the proportion of failure of family firms as opposed to their counterpart firms is relatively low. Analyzing the bankruptcy files of firms from 2002 to 2014 shows a considerably low ratio of family firms at the 5% significant level. This affirms that the low risk illustrated in the Altman Z-score regression is consistent to the lower ratio of family firms that were declared bankrupted over the study period, which makes Spain an important case in this study.

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Section: Family Control and Firm Valuementioning

confidence: 99%

Section: Robustness Testmentioning

confidence: 99%

Section: Introduction and Literature Reviewmentioning

confidence: 99%

See 1 more Smart Citation

Are Family Firms Financially Healthier Than Non-Family Firm?

Ntoung

Oliveira

Sousa

et al. 2019

JRFM

View full text Add to dashboard Cite

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The impact of ownership structure on firm performance: The role of chairman and CEO in Portugal

Ntoung¹,

Biglieri²,

Oliveira³

et al. 2017

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This analysis investigates how family ownership structure affects the corporate performance of Portuguese listed firms using a panel data set covering the period from 2006 to 2014. Three characteristics of family firms (such as active management, active founder or heir and second blockholder) were examined with respect to the corporate performance. The main finding is that family firms over perform non-family in term productivity and profitability. This indicates that companies that have total family control are more productive and profitable than those market favour firms that the family does not have total ownership. Specifically, family firms with active founders perform better whereas those with active heirs significantly outperform compared to family firms with passive owners or heirs. Family firms with a family member in the company as either CEO or Chairman create more value and are more profitable than non-family firms. Family firms with descendant as CEO perform better meanwhile family firms with the founder as CEO significantly outperform family firms with Outside CEO for corporate performance. Lastly, the presence of a second blockholder who owns between 5-10% of the voting right enhances the corporate performance of the family firms as it counterbalances the controlling shareholder from unnecessary behaviours.

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Family firms and performance empirical analysis from Spain

Tabot¹,

Biglieri²,

Outman³

et al. 2017

COC

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This paper provides empirical evidence on the impact of family-controlled firms on corporate performance, using financial information of 47590 family firms from 2010 to 2014. From the overall sample, approximately two-third of family firms have concentrated ownership, meanwhile, the remaining one-third have dispersed and unknown ownership. With respect to generation, 76% of the family firms were in the first generation, 21% for the second generation and approximately 3% for the third generation. The main findings are that ownership structure of family firms have a positive impact on their performance. Specifically, family firms with concentrated ownership outperformed family firms with dispersed ownership; however, family firms in the 1ª generation outperform family business in the 2ª and 3ª generation. Also, aggressive incentive policy negatively affects the performance of family business for the 1ª generation and has no impact on performance for 2ª and 3ª generational firms. Unlisted family firms have lower performance than listed family firms. Lastly, medium size family businesses outperform than small and large size family businesses.

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Ownership structure and financial performance of small firms in Spain

Cited by 3 publications

References 15 publications

Are Family Firms Financially Healthier Than Non-Family Firm?

Are Family Firms Financially Healthier Than Non-Family Firm?

The impact of ownership structure on firm performance: The role of chairman and CEO in Portugal

Family firms and performance empirical analysis from Spain

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