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Ownership and performance in the Italian stock exchange: the puzzle of family firms

Author

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  • Laura Abrardi

    (Politecnico di Torino, DIGEP)

  • Laura Rondi

    (Politecnico di Torino, DIGEP)

Abstract

We present new evidence on the relationship between ownership, control and performance in family firms, by using a sample of Italian publicly listed companies from 2000 to 2017. We account for the potential self-selection bias of family firms with an endogenous treatment selection model. We do not find consistent evidence of a performance premium of Italian family firms or family CEOs as family firms achieve superior profitability, but lower market to book ratios. Interestingly, however, firm value is negatively impacted when the high controlling shares are disjointed from family ownership and when the family CEO is also Chair of the board. We also find that the equity stake is significantly lower when the CEO is a member of the controlling family, suggesting a trade-off between ownership and control within family firms.

Suggested Citation

  • Laura Abrardi & Laura Rondi, 2020. "Ownership and performance in the Italian stock exchange: the puzzle of family firms," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 47(4), pages 613-643, December.
    • Handle: RePEc:spr:epolin:v:47:y:2020:i:4:d:10.1007_s40812-020-00160-z
    DOI: 10.1007/s40812-020-00160-z
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    2. Wenzhen Mai & Nik Intan Norhan Binti Abdul Hamid, 2021. "The Moderating Effect of Family Business Ownership on the Relationship between Short-Selling Mechanism and Firm Value for Listed Companies in China," JRFM, MDPI, vol. 14(6), pages 1-20, May.

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    More about this item

    Keywords

    Family firms; Corporate governance and control; Firm ownership;
    All these keywords.

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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