Owner identity and firm performance: evidence from European companies

The nature and the concentration of the ownership can affect firm’s performance by shaping incentives of agents and firm objectives. Different ultimate owners (founding family, banks and institutional investors, industrial companies, government and others) may influence company strategy very differently with regard to profit goals, dividends, capital structure, sales growth and other financial and operative targets. In this paper, I provide preliminary evidence on the hypothesis that family ownership affects firm performance measured by firm turnover. In particular, I will show that family ownership negatively affects firm’s ability to seize market opportunities, especially when financial reasons hinder company growth and the risk of failure is significant. The lower sensibility of family firms to industry demand may be helpful for understanding the family firms’ trade-off between growth and company control.