Research report

Founding family ownership, stock market returns, and agency problems

BP2-STS

    01.10.2018

53

English This paper explores the relationship between founding family ownership and stock market returns. Using the entire population of non-financial firms listed on the Swiss stock market for 2003–2013, we find that the stock returns of family firms are significantly higher than those of non-family firms after adjusting the returns for different firm characteristics and risk factors. Family firms generate an annual abnormal return of 2.8% to 7.1%. Moreover, family firms potentially having more agency problems earn higher abnormal returns. Although they are more profitable, family firms have lower valuations and regularly surprise markets by announcing better-than-expected earnings. The evidence suggests that outside investors earn a premium for being exposed to the specific agency problems present in family firms.
Collections
Faculty
Faculté des sciences économiques et sociales et du management
Language
  • English
Classification
Economics
Other electronic version

Faculté SES

Series statement
  • Working Papers SES ; 490 (revised)
License
License undefined
Identifiers
  • RERO DOC 323189
  • RERO R008858881
Persistent URL
https://folia.unifr.ch/unifr/documents/307007
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