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Owner Identity and Firm Performance: Evidence from European Companies

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Author Info
Marco Cucculelli () (Universit… Politecnica delle Marche, Faculty of Economics "Giorgio Fu…")

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Abstract

Empirical evidence of the distribution of firms based on owner identity for a set of European countries reveals substantial differences. Using the sensitivity of a firm's sales to demand shocks as a measure of risk-taking behavior, the paper explores if owner identity affects the willingness of the firms to take risk in order to improve their current situation (venturing risk). Consistent with a hypothesis of risk-avoidance behavior, small- and medium-sized family-owned companies appear to under-react to changes in market demand, notably when ownership is highly concentrated and growth options are significant. However, they confirm their status of good performers when pure profitability measures are used. Conversely, industrial- and nonconcentrated family-owned firms appear more prone to deal with venturing risk, especially when the intensity of the risk is large as in the case of fast-growing companies or demand changes in nondomestic markets.

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File URL: http://dea2.univpm.it/quaderni/pdfmofir/Mofir024.pdf
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File Function: First version, 2009
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Publisher Info
Paper provided by Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economics in its series Mo.Fi.R. Working Papers with number 24.

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Length: 26
Date of creation: May 2009
Date of revision:
Handle: RePEc:anc:wmofir:24

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Web page: http://www.mofir.univpm.it/

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Find related papers by JEL classification:
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure
L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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  1. Marianne Bertrand & Antoinette Schoar, 2006. "The Role of Family in Family Firms," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 73-96, Spring.
  2. Asli Demirgüç-Kunt & Vojislav Maksimovic, 1998. "Law, Finance, and Firm Growth," Journal of Finance, American Finance Association, vol. 53(6), pages 2107-2137, December. [Downloadable!] (restricted)
  3. Demsetz, Harold & Villalonga, Belen, 2001. "Ownership structure and corporate performance," Journal of Corporate Finance, Elsevier, vol. 7(3), pages 209-233, September. [Downloadable!] (restricted)
  4. Maury, Benjamin, 2006. "Family ownership and firm performance: Empirical evidence from Western European corporations," Journal of Corporate Finance, Elsevier, vol. 12(2), pages 321-341, January. [Downloadable!] (restricted)
  5. Faccio, Mara & Lang, Larry H. P., 2002. "The ultimate ownership of Western European corporations," Journal of Financial Economics, Elsevier, vol. 65(3), pages 365-395, September. [Downloadable!] (restricted)
  6. Miller, Danny & Le Breton-Miller, Isabelle & Lester, Richard H. & Cannella Jr., Albert A., 2007. "Are family firms really superior performers?," Journal of Corporate Finance, Elsevier, vol. 13(5), pages 829-858, December. [Downloadable!] (restricted)
  7. Nicholas Bloom & John Van Reenen, 2007. "Measuring and Explaining Management Practices Across Firms and Countries," The Quarterly Journal of Economics, MIT Press, vol. 122(4), pages 1351-1408, November. [Downloadable!] (restricted)
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  8. Marianne Bertrand & Paras Mehta & Sendhil Mullainathan, 2002. "Ferreting Out Tunneling: An Application To Indian Business Groups," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 121-148, February. [Downloadable!] (restricted)
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  9. Villalonga, Belen & Amit, Raphael, 2006. "How do family ownership, control and management affect firm value?," Journal of Financial Economics, Elsevier, vol. 80(2), pages 385-417, May. [Downloadable!] (restricted)
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This page was last updated on 2009-11-12.

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