Article2016

Influence of family ownership on company performance

Ilse María Beuren · Leandro Politelo · José Augusto Sousa Martins

25 citations0/0 files storedInternational Journal of Managerial Finance

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Family Business Performance and Succession Corporate Finance and Governance Corporate Governance and Financial Management

Abstract

Purpose The purpose of this paper is to investigate the relationship between family ownership and the performance of Brazilian companies listed on BM&FBovespa. It also provides a comparison with the results of Shyu’s (2011) survey conducted in Taiwanese companies. Design/methodology/approach A sample of 187 Brazilian companies were surveyed, of which 120 were classified as family owned, considering the family participation in the capital and in the board of directors. As in Shyu’s (2011) study, three variables of performance, two of accounting and one of market, and seven variables of control were considered. Simultaneous equations were used to analyze the relationship between family participation and corporate performance, the test of mean was used to compare performance and other variables between family- and non-family-owned companies, and a graphical analysis was used to verify the extent to which family involvement contributes to better performance. Findings The results show that family-owned companies have lower performance compared with non-family-owned companies. They indicate a positive relationship between family participation (ownership) and performance of the company. They also reveal that the performance of family-owned companies is maximized when family involvement reaches 60 and 70 percent. Originality/value The survey conducted on Brazilian companies shows results that are partially consistent with those observed by Shyu (2011) in Taiwanese companies. Similarities were found in the relationship between family involvement and the performance of the company. However, the results differ with regard to the performance of family- and non-family-owned companies and the optimal level of family participation that can maximize performance.

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References

1999Corporate Ownership Around the World 1986Large Shareholders and Corporate Control 1988Management ownership and market valuation 1985The Structure of Corporate Ownership: Causes and Consequences 2000The separation of ownership and control in East Asian Corporations 2003Founding‐Family Ownership and Firm Performance: Evidence from the S&P 500 1990Additional evidence on equity ownership and corporate value 2002The ultimate ownership of Western European corporations

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