Family Firms

Family controlled firms are ubiquitous, both among publicly listed and privately owned entities. They represent a key driver for supporting the transition toward a sustainable economy as they globally dominate some of the key sectors that have a significant environmental and social impact. Family firms have been lauded for their commitment to long-term goals, stability, authenticity and values. Yet, family-controlled firms face substantial corporate governance challenges. Succession is often complex and difficult to resolve. Listing on stock markets raises issues about corporate control. Institutional investors are often hostile to the use of dual class shares, tenure voting or other structures that allow families and founders to transit their vision over multiple generations. There are concerns about conflicts of interest and related party transactions.

Family controlled enterprises are essential for the future of capitalism and their role merits attention reflection and debate:

Do family firms have sufficient access to capital markets?
Are family enterprises more oriented to pursue the company's sustainable success in the long run?
Are family firms truly committed to sustainability and ESG?
Is the family firm model sufficiently understood by institutional investors?
What governance measures could support and preserve their commitment toward a long-term sustainability of their businesses?
A significant part of family enterprises is represented by SMEs: how do they tackle with sustainability opportunities and risks and what are the obstacles they encounter along this path?

There are also numerous policy initiatives that will directly or indirectly affect family firms. For example, the European Union's action plan to create a capital market union, listing rule reform in the UK and EU and elsewhere, the EU’s Entrepreneurship 2020 Action Plan and policy initiatives on sustainability at all levels.

ECGI research members have published extensively on family-controlled firms and their publications are among the most widely cited in the literature.

Traditional research topics include the role of the family in family firms, marriage, control enhancing mechanisms, private benefits, conflicts of interest, succession, performance, life-cycle, business owners and politics.

The ECGI Family Enterprise Programme is directed by Mary Johnstone-Louis (Senior Research Fellow, Saïd Business School, University of Oxford) and co-chaired by Morten Bennedsen (Niels Bohr Professor at the University of Copenhagen and André and Rosalie Hoffmann Chaired Professor of Family Enterprise at INSEAD) and Yupana Wiwattanakantang (Professor of Finance, NUS Business School, National University of Singapore).

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Researchers

The following are just some of the ECGI researchers working in the field:

Anete Pajuste	Latvia	Stockholm School of Economics (Riga)
Brian Cheffins	United Kingdom	Cambridge University
Antoinette Schoar	United States	MIT Sloan School of Management
Belen Villalonga	United States	Stern School of Business, New York University
Colin Mayer	United Kingdom	Said Business School, University of Oxford
Julian Franks	United Kingdom	London Business School
Marc Goergen	Spain	IE Business School
Marianne Bertrand	United States	The University of Chicago Booth School of Business
Mike Burkart	Sweden	London School of Economics and Political Science
Morten Bennedsen	France	INSEAD
Paolo Volpin	United Kingdom	Cass Business School
Randall Morck	Canada	School of Business, University of Alberta
Ronald Masulis	Australia	UNSW School of Business, University of New South Wales
Woochan Kim	South Korea	Korea University Business School
Yupana Wiwattanakantang	Singapore	NUS Business School, National University of Singapore

Queries, suggested inclusions and other ideas?

Contact Morten Bennedsen

Research Member

André and Rosalie Hoffmann Chaired Professor of Family Enterprise

Send a message

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Resources:

Anderson, R.C., & Reeb, D.M., 2003, Founding family ownership and firm performance: Evidence from the S&P 500, Journal of Finance, 58(3), 1301-1328.

Andres, C. 2008. Large shareholders and firm performance - An empirical examination of founding-family ownership. Journal of Corporate Finance 14: 431-445.

Ansari, I.F., M. Goergen, and S. Mira. 2014. The determinants of the CEO successor choice in family firms. Journal of Corporate Finance 28: 6-25.

Bajo, Emanuele and Barbi, Massimiliano and Bigelli, Marco and Croci, Ettore (2019). Bolstering Family Control: Evidence from Loyalty Shares (July 1, 2019). European Corporate Governance Institute - Finance Working Paper No. 619/2019.

Bennedsen, Morten, Kasper Meisner Nielsen, Francisco Pérez-González and Daniel Wolfenzon, 2007, Inside the Family Firm: The Role of Families in Succession Decisions and Performance, Quarterly Journal of Economics 122(2), 647-691.

Bertrand, Marianne and Antoinette Schoar, 2006, The Role of Family in Family Firms, Journal of Economic Perspectives 20 (2), 73-96.

Bohren, Ø., Stacescu, B., Almli, L. F., & Søndergaard, K. L. (2019). When Does the Family Govern the Family Firm? Journal of Financial & Quantitative Analysis, 54(5), 2085–2117.

Bunkanwanicha, Pramuan and Gupta, Jyoti and Wiwattanakantang, Yupana (2014). Family Business Groups and Organizational Structure: A Study of Bank Pyramidal Ownership in Thailand (July 11, 2014). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 434/2014.

Burkart, Mike, Fausto Panunzi, and Andrei Shleifer, 2003, Family firms, Journal of Finance, 58(5), 2167-2201.

Caprio L, Croci E, Del Giudice A. 2011. Ownership structure, family control, and acquisition decisions. Journal of Corporate Finance 17(5): 1636–1657."

Chen, T.-Y., Dasgupta, S., & Yu, Y. (2014). Transparency and Financing Choices of Family Firms. Journal of Financial & Quantitative Analysis, 49(2), 381–408.

Chen, X., Q. Cheng, and Z. Dai. 2013. Family ownership and CEO turnover. Contemporary Accounting Research 30: 1166-1190.

Claessens S, Djankov S, Lang LHP. 2000. The separation of ownership and control in East Asian corporations. Journal of Financial Economics 58(1–2): 81–112.

David Sraer, David Thesmar (2007). Performance and Behavior of Family Firms: Evidence from the French Stock Market, Journal of the European Economic Association, Volume 5, Issue 4, 1 June 2007, Pages 709–751.

Ellul, A., Pagano, M., & Panunzi, F. (2010). Inheritance Law and Investment in Family Firms. The American Economic Review, 100(5), 2414-2450.

Faccio M, Lang LHP. 2002. The ultimate ownership of Western European corporations. Journal of Financial Economics 65(3): 365–395.

Feldman ER, Amit R, Villalonga B. 2016. Corporate divestitures and family control. Strategic Management Journal 37(3): 429–446.

Feldman, E. R., Amit, R., & Villalonga, B. (2019). Family firms and the stock market performance of acquisitions and divestitures. Strategic Management Journal (John Wiley & Sons, Inc. ), 40(5), 757–780.

Franks, Julian, Colin Mayer, Paolo Volpin and Hannes F. Wagner, 2011. The Life Cycle of Family Ownership: International Evidence, Review of Financial Studies 25 (6), 1675- 1712.

Goergen, Marc and Mira, Svetlana and Ansari, Iram Fatima (2019). Earnings Management around Founder CEO Re-appointments and Successions in Family Firms (August 1, 2019). European Corporate Governance Institute - Finance Working Paper No. 620/2019.

Gómez-Mejía LR, Haynes KT, Núñez-Nickel M, Jacobson KJ, Moyano-Fuentes J. 2007. Socioemotional wealth and business risks in family-controlled firms: evidence from Spanish olive oil mills. Administrative Science Quarterly 52(1): 106–137.

Gómez-Mejía LR, Makri M, Kintana ML. 2010. Diversification decisions in family‐controlled firms. Journal of Management Studies 47(2): 223–252.

Gómez-Mejía, L.R., C. Cruz, P. Berrone, and J. De Castro. 2011. The bind that ties: Socioemotional wealth preservation in family firms. Academy of Management Annals 5: 653- 707.

Hwang, Sunwoo and Kim, Woochan (2014). When Heirs Become Major Shareholders: Evidence on Tunneling and Succession Through Related-Party Transactions (March 19, 2014). ECGI - Finance Working Paper No. 413/2014.

La Porta, Rafael, Florencio Lopez-de-Silanes, and Andrei Shleifer, 1999, Corporate Ownership Around the World, Journal of Finance 54, 471-517.

Masulis, Ronald W. and Pham, Peter Kien and Zein, Jason (2019). Family Business Group Expansion Through IPOs: The Role of Internal Capital Markets in Financing Growth While Preserving Control (June 3, 2019). Management Science, Forthcoming.

Masulis, Ronald W., Peter Kien Pham, and Jason Zein, 2011, Family Business Groups around the World: Financing Advantages, Control Motivations, and Organizational Choices, Review of Financial Studies 24 (1), 3556-3600.

Maury, B. (2006). Family ownership and firm performance: Empirical evidence from Western European corporations. Journal of Corporate Finance. Volume 12, Issue 2, January 2006, Pages 321-341.

Morck Randall, David Stangeland, and Bernard Yeung, 2005, Corporate Governance, Economic Entrenchment, and Growth. Journal of Economic Literature 43 (3), 655- 720.

Neckebrouck, J., Schulze, W., & Zellweger, T. (2018). Are Family Firms Good Employers? Academy of Management Journal, 61(2), 553–585.

Patel, P. C., & Cooper, D. (2014). Structural Power Equality between Family and Non-Family Tmt Members and the Performance of Family Firms. Academy of Management Journal, 57(6), 1624–1649.

Perez-Gonzales, Francisco, 2006, Inherited Control and Firm Performance, American Economic Review 96(5), 1559-1588.

Sharma P, Manikutty S. 2005. Strategic divestments in family firms: role of family structure and community culture. Entrepreneurship Theory and Practice 29(3): 293–311.

Shleifer A, Vishny RW. 1986. Large shareholders and corporate control. Journal of Political Economy 94(3): 461–488.

Smith, Brian F. and Ben Amoako-Adu, 2005, Management Succession and Financial Performance of Family Controlled Firms, in Robert Watson (ed.), Governance and Ownership, (Elgar: Cheltenhamfort), 314-341.

Villalonga B, Amit R. 2006. How do family ownership, control and management affect firm value? Journal of Financial Economics 80(2): 385–417.

Villalonga B, Amit R. 2009. How are US family firms controlled? Review of Financial Studies 22(8): 3047–3091.

Villalonga B, Amit R. 2010. Family control of firms and industries. Financial Management 39(3): 863–904.

Wang, D. 2006. Founding family ownership and earnings quality. Journal of Accounting Research 44: 619-656.

Zellweger TM, Kellermanns FW, Chrisman JJ, Chua JH. 2012. Family control and family firm valuation by family CEOs: the importance of intentions for transgenerational control. Organization Science 23(3): 851–868.