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Founding Family Ownership and Firm Performance: Some Evidence from the Italian Stock Market

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  • Pierluigi Pierni

    (Department of Economics and Management, University of Pavia, Via S. Felice, 5, 27100 Pavia, Italy)

  • Dennis Marco Montagna

    (Department of Economics and Management, University of Pavia, Via S. Felice, 5, 27100 Pavia, Italy)

  • Mario Maggi

    (Department of Economics and Management, University of Pavia, Via S. Felice, 5, 27100 Pavia, Italy)

Abstract

This study investigates the relationship between founding family ownership and firm performance in the Italian stock market. Making use of a precise definition of Founding family ownership factor, an empirical analysis on the stock monthly returns has been carried out, from an investor’s point of view facing an asset allocation problem. Portfolios built on the basis of the Founding family factor show superior returns with respect to both a benchmark index and a portfolio strategy based on alternative (non-family-owned) firms on the market. Furthermore, there is evidence that an active role of family in the company governance, at least in Italy, may be beneficial for the superior performance of the Founding family portfolio . The results may suggest that the Founding family feature deserves attention in asset allocation.

Suggested Citation

  • Pierluigi Pierni & Dennis Marco Montagna & Mario Maggi, 2022. "Founding Family Ownership and Firm Performance: Some Evidence from the Italian Stock Market," JRFM, MDPI, vol. 15(5), pages 1-19, May.
    • Handle: RePEc:gam:jjrfmx:v:15:y:2022:i:5:p:231-:d:822077
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    References listed on IDEAS

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    2. Isakov, Dušan & Weisskopf, Jean-Philippe, 2014. "Are founding families special blockholders? An investigation of controlling shareholder influence on firm performance," Journal of Banking & Finance, Elsevier, vol. 41(C), pages 1-16.
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    4. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, April.
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    6. 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.
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