Table of Contents

Handbook of Research on Family Business

Handbook of Research on Family Business

Elgar original reference

Edited by Panikklos Zata Poutziouris, Kosmas X. Smyrnios and Sabine B. Klein

The Handbook of Research on Family Business provides a comprehensive first port of call for those wishing to survey progress in the theory and practice of family business research. In response to the extensive growth of family business as a topic of academic inquiry, the principal objective of the Handbook is to provide an authoritative and scholarly overview of current thinking in this multidisciplinary field.

Chapter 29: Family Firms and Financial Behavior: How Family Shareholder Preferences Influence Firms’ Financing

Myriam Lyagoubi

Subjects: business and management, family business

Extract

30 The structure and performance of the UK family business PLC economy* Panikkos Zata Poutziouris This chapter reports on the profile of UK family-controlled quoted companies and, via the Family Business Index, reports on their performance vis-à-vis that of their mainstream counterparts. It comes in response to recent empirical investigations on the role and performance of family-controlled firms in stock markets across leading economies, notably those of the US, France, Germany and Spain. The investigation focuses on UK quoted family-controlled companies that are constituents of the Financial Times Stock Exchange (FTSE) All-Share Index and draws comparative evidence on their structure, growth, profitability and share price performance over a five-year period, 2000–04. Interestingly, the research reveals that the index of family business public limited companies (FB-PLCs) capitalization performs better than that of mainstream FTSE indices, despite the continued diminishing role of family shareholding (Franks et al., 2003). The outperformance of UK FB-PLCs mirrors US findings where quoted family firms (with founding families playing a active role in ownership and management control) financially outperform their Standard and Poors (S&P) counterparts (Anderson and Reeb, 2003). In the light of recent concerns about the effectiveness of corporate governance mechanisms to master agency costs, it emerges that the quoted family-controlled PLC model is not a ‘deficient’ organization structure. Quoted family firms have their own approach in mastering their long-term growth and development, and, moreover, in managing principal versus agency conflicts, in building relations with financial agents, in...

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