To further complete the currently fragmented findings of family firm research, this empirical thesis analyses the performance of large founding-family firms listed in the USA. Thus, this research builds up upon the studies of Anderson and Reeb (2003), Cannella et al. (2015), Miller et al. (2007; 2011), and Villalonga and Amit (2006). For the analysis, a random sample of S&P1500 firms in the period 1996 – 2018 was generated. To obtain information on family firm variables such as ownership and managerial involvement, a manual research was conducted for all 300 firms in the sample using annual reports and proxy statements. The impact of several aspects of founding-family involvement was analysed in a panel data analysis that employed the performance measures Tobin’s Q and Return on Assets as dependent variables. Controlling for industry and firm characteristics, the results did not back up the postulated hypotheses. The findings could not support an eventual outperformance by founding-family firms and challenged the results of past studies through contrary findings on the influence of firm founders and their descendants. The results of the analysis of Tobin’s Q and Return on Assets differ significantly and raise the question to which extent these differing results can be attributed to the stock market’s view on founding-family firms.
Table of Contents
1. Introduction
1.1 What constitutes a founding-family firm?
2. Theory and hypotheses
3. Methodology and data
3.1 Sample Selection
3.2 Data and variables
4. Models
4.1 Robustness tests
5. Main results
6. Discussion
7. Conclusion
Research Objectives & Key Themes
This empirical thesis investigates whether large founding-family firms listed in the US outperform their non-family counterparts and examines which factors, such as founder involvement or ownership structure, are critical for superior firm performance. It specifically seeks to address the fragmented and contradictory findings in existing literature by analyzing a sample of 300 S&P1500 firms over the period 1996–2018.
- Analysis of family firm performance using Tobin’s Q and Return on Assets (ROA).
- Evaluation of different family firm subcategories (e.g., first generation, second generation, lone founder).
- Impact of founder involvement in executive positions (CEO, Chairman, or both) on performance.
- Assessing firm performance and stability during periods of economic crisis.
- Controlling for endogeneity and sample selection bias using advanced econometric models.
Excerpt from the Book
What constitutes a founding-family firm?
In past research on family firms, various and sometimes widely differing definitions were applied for what constitutes a family firm. Definitions vary either on the level of involvement of the founders, their descendants and/or other family members. Additionally, different thresholds on the percentage of ownership of the family or individual members are applied. If the founder or the founder’s family is involved in the company by either serving on the board or in a management position or holding ownership of the company, the firm is frequently classified as a family firm in the literature (see for example Anderson and Reeb, 2003; Barth et al., 2005; Cannella et al., 2015; Cronqvist and Nilsson, 2003; Faccio and Lang, 2002; La Porta et al., 1999; Miller et al., 2007; Smith and Amoako-Adu, 1999) .
Other definitions require a stronger managerial involvement of family members, for instance one family member holding the office of the CEO (McConaughy et al., 1998). An involvement of the founder itself is also often treated as a special case and analysed separately. Miller et al. (2007) take this view on the importance of founder involvement one step further and distinguish between “lone founder” companies, in which only the founder and no other family member is present, and family firms, in which also other family members are involved. Their reasoning is based on the influences and possible conflicts of interests that result from the different responsibilities that a founder bears in his roles for the firm and for the family.
Summary of Chapters
1. Introduction: Outlines the research gap regarding family firm performance and defines the scope of the study using large publicly traded US companies.
2. Theory and hypotheses: Discusses competing academic perspectives on family firms and derives specific hypotheses regarding performance and crisis resistance.
3. Methodology and data: Details the sample selection process and the variables used to operationalize family involvement and firm performance.
4. Models: Explains the econometric approaches used, including control variables, the Heckman two-stage model, and robustness tests.
5. Main results: Presents the findings from the regression analyses for both Tobin’s Q and ROA, evaluating the proposed hypotheses.
6. Discussion: Interprets the findings, highlights the discrepancy between market-based and accounting-based measures, and addresses study limitations.
7. Conclusion: Summarizes the key insights and suggests directions for future research in family firm performance.
Keywords
Founding-Family Ownership, Firm Performance, S&P1500, Tobin’s Q, Return on Assets, Lone Founder, Family Firm, Agency Conflicts, Crisis Resistance, Entrepreneurial Orientation, Founder Involvement, Panel Data Analysis, Econometrics, Corporate Governance, Market Evaluation.
Frequently Asked Questions
What is the primary focus of this thesis?
The thesis analyzes the performance of large founding-family firms listed in the USA to determine if they outperform non-family firms and to identify key factors influencing their success.
What are the central thematic areas?
Key themes include the impact of family ownership and control, the role of founders, the distinction between different generations of family firms, and how performance varies during economic crises.
What is the primary research goal?
The goal is to provide clarity on the conflicting findings in previous family firm research by applying a consistent definition and methodology to a large sample of US public companies.
Which research methods are employed?
The study uses a panel data analysis, incorporating a Heckman two-stage model to control for selection bias and logit regression to mitigate endogeneity in family ownership.
What does the main part of the work cover?
It covers theoretical derivations of hypotheses, a detailed description of the data collection process, the development of econometric models, and a thorough analysis of results comparing market-based and accounting-based performance.
Which keywords define this work?
Core keywords include founding-family ownership, firm performance, Tobin’s Q, Return on Assets, and lone founder firms.
Why are Tobin’s Q and ROA both used as performance measures?
Tobin’s Q represents the market’s evaluation of future prospects, while ROA provides an objective accounting-based view of current performance, allowing for a multifaceted analysis.
How does the market's view of family firms differ from accounting results?
The study finds that while the market often attributes specific performance expectations to family-related variables (seen in Tobin’s Q), these differences are frequently not reflected in current accounting results (ROA).
What is the significance of the "lone founder" category?
The study examines lone founder firms separately from other family firms, as their unique entrepreneurial role often leads to different performance outcomes than those of multi-family member firms.
- Citation du texte
- Philip Quitterer (Auteur), 2019, Founding-Family Ownership, Firm Performance and Crisis Resistance, Munich, GRIN Verlag, https://www.grin.com/document/984048
