The stock performance of family firms in the Portuguese market

Marcelo, José Luis Miralles; Miralles-Quirós, María del Mar; Lisboa, Inês

doi:10.1080/09603107.2013.848025

Cited by 10 publications

(12 citation statements)

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“…Fahlenbrach (2009) examines the performance of a subsample of family firms-those run by a founder-CEO in the US-finding that these firms generate significantly positive abnormal returns. Miralles-Marcelo et al (2013) find that, for a sample of Portuguese companies, family firms outperform others. However, this body of literature does not find explanations for the stock market performance of family firms.…”

Section: Introductionmentioning

confidence: 81%

Founding family ownership, stock market returns, and agency problems

Eugster

Isakov

2019

Journal of Banking & Finance

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This paper explores the relationship between founding family ownership and stock market returns. Using the entire population of non-financial firms listed on the Swiss stock market for 2003-2013, we find that the stock returns of family firms are significantly higher than those of non-family firms after adjusting the returns for different firm characteristics and risk factors.Family firms generate an annual abnormal return of 2.8% to 7.1%. Moreover, family firms potentially having more agency problems earn higher abnormal returns. Although they are more profitable, family firms have lower valuations and regularly surprise markets by announcing better-than-expected earnings. The evidence suggests that outside investors earn a premium for being exposed to the specific agency problems present in family firms. JEL Classification: G32; G14Abstract This paper explores the relationship between founding family ownership and stock market returns. Using the entire population of non-financial firms listed on the Swiss stock market for 2003-2013, we find that the stock returns of family firms are significantly higher than those of non-family firms after adjusting the returns for different firm characteristics and risk factors. Family firms generate an annual abnormal return of 2.8% to 7.1%. Moreover, family firms potentially having more agency problems earn higher abnormal returns. Although they are more profitable, family firms have lower valuations and regularly surprise markets by announcing better-than-expected earnings. The evidence suggests that outside investors earn a premium for being exposed to the specific agency problems present in family firms. Citation proposalNicolas Eugster, Dušan Isakov. 2018. «Founding family ownership, stock market returns, and agency problems (Version october 2018)». Working Papers SES 490, Faculty of Economics and Social Sciences, University of Fribourg (Switzerland) Jel Classification G32, G14.

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Section: Introductionmentioning

confidence: 81%

Founding family ownership, stock market returns, and agency problems

Eugster

Isakov

2019

Journal of Banking & Finance

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“…Many empirical studies of the U.S., European and other markets have used the Miralles-Marcelo, Miralles-Quirós [2] has noted the sensitivity of family firms to debt and illiquidity. As also noted by Amihud [35], illiquid stocks are more sensitive to market illiquidity, so we expect that family firms will likely be more sensitive to this.…”

Section: Methodsmentioning

confidence: 99%

“…Miralles-Marcelo, Miralles-Quirós [2] also describe how debt may help explain returns, particularly for small firms, in light of the above mentioned agency issues (also described in Bhandari [36] and Fama and French [37]). Therefore, following Miralles-Marcelo, Miralles-Quirós [2], we add these two variables to the Fama-French model to create a new Five-Factor Model. The illiquidity metric is from Amihud [35], measured originally as absolute value of return/volume; we found this to be very small in our sample, so we used the natural log of this ratio.…”

Section: Methodsmentioning

confidence: 99%

“…The illiquidity metric is from Amihud [35], measured originally as absolute value of return/volume; we found this to be very small in our sample, so we used the natural log of this ratio. As with Miralles-Marcelo, Miralles-Quirós [2], the debt metric is the average of debt and market value for each stock.…”

Section: Methodsmentioning

confidence: 99%

“…Reeb [5] and Lipiec [12] find the opposite, with Miralles-Marcelo, Miralles-Quirós [2] finding that the family vs. non-family outperformance is particularly strong for small firms.…”

Section: Introductionmentioning

confidence: 98%

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Family-Owned Firms and Stock Returns: Evidence from the Chinese Stock Market

Zhang¹,

Gregory‐Allen²

2018

TEL

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We examine stock return performance of Chinese family-firms vs. Nonfamily-firms, and the impact on family-firm returns of firm size, having a founder as CEO, and levels of family ownership. We model returns with the Capital Asset Pricing Model (CAPM), the Fama-French 3-factor model [1], and a new 5-factor model we modified from Miralles-Marcelo, Miralles-Quirós [2], which adds factors for debt and illiquidity. In previous studies, though the prevalence is for family-firm outperformance, the results have been mixed. Using CAPM or the Fama-French 3-factor model, we find that family-firms outperform nonfamily-firms, but with the 5-factor model that outperformance vanishes, and this is robust to controlling for the GFC. For the founder CEO, firm size and family ownership considerations, again previous research has been mixed. With CAPM and Fama-French 3-factor models, we find that founder CEOs outperform nonfounder, large firms outperform small firms, and higher family ownership outperforms lower ownership. However, with the 5-factor model, only size remains as having significant impact. This study helps to reconcile conflicting results in previous research.

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Determinants of the Economic Performance of Portuguese Family Firms: Is Innovation Relevant?

Teixeira

Correia

2019

Entrepreneurship and Family Business Vitality

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The stock performance of family firms in the Portuguese market

Cited by 10 publications

References 45 publications

Founding family ownership, stock market returns, and agency problems

Founding family ownership, stock market returns, and agency problems

Family-Owned Firms and Stock Returns: Evidence from the Chinese Stock Market

Determinants of the Economic Performance of Portuguese Family Firms: Is Innovation Relevant?

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