Research report

Founding family ownership, stock market returns, and agency problems

    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
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
Statistics

Document views: 21 File downloads:
  • WP_SES_490_revised.pdf: 1