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Edited by Panikklos Zata Poutziouris, Kosmas X. Smyrnios and Sabine B. Klein
Chapter 30: The Structure and Performance of the UK Family Business PLC Economy
31 Ownership structure and ﬁrm performance: evidence from Spanish family ﬁrms* Susana Menéndez-Requejo This chapter explores the relationship between founding-family ownership and ﬁrm performance. Starting from the agency theory approach, the potential beneﬁts and costs of family ownership, and their inﬂuence on ﬁrm performance, are considered. The database under investigation constitutes a 8000 large and medium size Spanish ﬁrms. Several univariate analyses are conducted, as well as a cross-sectional analysis and a data envelopment analysis (DEA) in order to compare family and non-family ﬁrms performance. The empirical analysis shows that Spanish family ﬁrms perform better, in terms of return on equity, than non-family ﬁrms of the same size and in the same industry. Family involvement in management of the ﬁrm does not prove to have a positive impact on ﬁrm performance. Introduction Founding-families are a special class of shareholder, because often they hold poorly diversiﬁed portfolios but, at the same time, they are long-term investors, as their aim is to bequeath the ﬁrm to the next generations (Anderson and Reeb, 2003). In this context, the aim of this chapter is to evaluate the eﬀects of family governance and ownership on ﬁrm performance, starting from the agency theory approach: 1. On the one hand, having large shareholders such as founding families, could negatively inﬂuence ﬁrm performance. Founding families have concerns and interests of their own, such as stability and capital preservation, compensation, related-party transactions, nepotism in manager selection or special dividends, that may not align...
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