2003/05/06 by Ronald C. Anderson, Rolph E. Anderson, David M. Reeb · 34 citations
Business, Management and Accounting · #Corporate Finance and Governance #Family Business Performance and Succession #Working Capital and Financial Performance
paper · doi:10.1111/1540-6261.00567
Abstract We investigate the relation between founding‐family ownership and firm performance. We find that family ownership is both prevalent and substantial; families are present in one‐third of the S&P 500 and account for 18 percent of outstanding equity. Contrary to our conjecture, we find family firms perform better than nonfamily firms. Additional analysis reveals that the relation between family holdings and firm performance is nonlinear and that when family members serve as CEO, performance is better than with outside CEOs. Overall, our results are inconsistent with the hypothesis that minority shareholders are adversely affected by family ownership, suggesting that family ownership is an effective organizational structure.