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Edited by Panikklos Zata Poutziouris, Kosmas X. Smyrnios and Sabine B. Klein
Chapter 29: Family Firms and Financial Behavior: How Family Shareholder Preferences Influence Firms’ Financing
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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