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The Benefits of Family Ownership, Control and Management on Financial Performance of Firms


Audretsch, David B.; Hülsbeck, Marcel, and Erik E. Lehmann

Unternehmensführung und Organisation Working Paper No. 05-10, 2010-10-12

Abstract: The benefits of family ownership and control of firms are at the center of the family firm debate. Previous studies have used either family ownership or management as proxies for control. Both indicators are off the mark, as they do not measure ‘decision control’ as intended by the theory of the firm. This is the first study investigating the direct influence of family ownership, control and management on financial firm performance, while controlling for goal heterogeneity of different stakeholders. Our results clearly show that family control is beneficial for all stakeholders, while neither family ownership nor management influences financial performance. Monitoring behavior of families is the central component and essence of family firms and can be used as a point of departure for the development of a unified theory of family firms.

Presented at: Theories of Family Enterprise Conference 2010 Edmonton/Canada; XI. Symposium zur ökonomischen Analyse der Unternehmung der GEABA 2010 Frankfurt am Main/Germany.

About the Authors: David B. Audretsch, Ameritech Chair of Economic Developement and Director, Institute for Development Strategies, Indiana University, USA; King Saud University, Kingdom of Saudi Arabia; WHU Otto Beisheim School of Business, Germany. Marcel Hülsbeck and Erik E. Lehmann, Chair of Management and Organization, University of Augsburg, Germany.

Availability: SSRN (click to access)