The Effect of Family Control on Firm Value and Performance: Evidence from Continental Europe


  • We are grateful to Massimo Belcredi, Magda Bianco, Vincenzo Capizzi, Guido Corbetta, Ettore Croci, Mara Faccio, David Hillier, Anete Pajuste, Belen Villalonga, Dariusz Wójcik, and participants to the EFM Symposium on ‘Corporate Governance’ in Leeds (April 2005), to the EFA Annual Meeting in Moscow (August 2005), to the CEIS Symposium in Roma-Tor Vergata University (December 2005) to the EIASM workshop on “Family Firms Management Research” in Nice (June 2006), and to the conference on “Corporate Governance in Family/Unlisted Firms” in Thun (June 2006) for stimulating comments. The responsibility for any remaining errors rests fully with the authors. The research project has been funded by MIUR, COFIN 2003.


We investigate the relation between ownership structure and firm performance in Continental Europe, using data from 675 publicly traded corporations in 11 countries. Although family-controlled corporations exhibit larger separation between control and cash-flow rights, our results do not support the hypothesis that family control hampers firm performance. Valuation and operating performance are significantly higher in founder-controlled corporations and in corporations controlled by descendants who sit on the board as non-executive directors. When a descendant takes the position of CEO, family-controlled companies are not statistically distinguishable from non-family firms in terms of valuation and performance.