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Brian Smith, Ben Amoako-Adu (1999)
Management succession and financial performance of family controlled firmsJournal of Corporate Finance, 5
R. Porta, Florencio Silanes, Andrei Shleifer (1998)
Corporate Ownership Around the WorldCorporate Finance and Organizations eJournal
Luigi Zingales (1995)
What Determines the Value of Corporate VotesQuarterly Journal of Economics, 110
Ronald Lease, John Mcconnell, W. Mikkelson (1983)
The market value of control in publicly-traded corporationsJournal of Financial Economics, 11
J. Graham, Campbell Harvey (2002)
How Do Cfos Make Capital Budgeting and Capital Structure Decisions?Capital Markets: Asset Pricing & Valuation
Ronald Anderson, D. Reeb (2003)
Founding-Family Ownership and Firm Performance: Evidence from the S&P 500Journal of Finance, 58
Michael Jensen, W. Meckling (1976)
Theory of the Firm
Despite the common perception of public family‐run companies as poor investments, the evidence shows that they actually perform quite well. And there may be some good reasons for this: A family that both owns and controls a company avoids the classic agency problem—the natural tendency of professional managers to pursue some private interests at the expense of their shareholders—that confronts most publicly traded companies. The family's concentrated, long‐term investment in the company and knowledge of the business make them potentially effective and highly motivated monitors. Using a sample of “true” family firms from the S&P 500 (one that deliberately excludes “founder companies” like Microsoft and Dell), the authors show that these companies have in recent years produced considerably higher stock returns than their non‐family counterparts. At the same time, family companies with dual‐class share structures produced lower returns than those with a single class of shares, and the returns to dual‐class firms with insider‐dominated boards were still lower. Specific examples highlight the different ways that families maintain control, the consequences of the CEO choice (family member versus professional manager), and the potential benefits of the family's permanent presence, including a long‐term investment focus and reputation for fair dealing with corporate stakeholders.
Journal of Applied Corporate Finance – Wiley
Published: Sep 1, 2005
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