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

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.

Equity Markets Do Not Fit All: an Analysis of Public‐to‐Private Deals in Continental Europe

“…On the other hand, smaller companies, especially family-owned ones, often use duality as a way to reduce costs. Barontini and Caprio (2006) found a positive effect on Continental European companies' operating performance by family control and involvement in management. As a consequence, given the higher proportion of family firms in CE, we may hypothesise that duality has a positive impact on PTP results.…”

“…The main result achieved is to reduce the costs and disclosure burden of a listing and avoid dissatisfaction with a share price considered too low and too volatile. In other cases, such as when delisting leads to a change of ownership for a CE company, the deal is usually structured in a friendly way and relies on previous agreement with the controlling shareholders, given the limited number of floating shares available on the public market (Barontini and Caprio, 2006;Goergen and Renneboog, 2004). Such a context suggests that PTP performance may be different in Continental European countries.…”

Investability and Firm Value

“…Book value of debt is calculated as the book value of total assets less the book value of equity. Doidge et al (2004Doidge et al ( , 2009), Gozzi et al (2008), Beiner et al (2006), and Barontini and Caprio (2006) also use Tobin's q to proxy for firm value in their studies on the valuation effects of international cross-listing, internationalisation, corporate governance, and corporate ownership structure, respectively. All firm-level financial information is sourced from Worldscope for each year from 1980 to 2003.…”

Concentration de l'actionnariat, séparation des droits de vote et des droits de propriété et gestion des bénéfices: Une étude empirique canadienne

“…Si l'impact négatif ressort clairement des études effectuées dans le contexte asiatique, 6 il en est tout autrement des études ayant couvert les pays des continents européen et américain. 7 …”