Family Ownership and Control

Maria Sacristan-Navarro, Universidad Rey Juan Carlos, Silvia Gomez-Anson, University of Leon, and Laura Cabeza-Garcia, University of Oviedo, recently published “Family Ownership and Control, the Presence of Other Large Shareholders, and Firm Permanence: Further Evidence,” in the March 2011 issue of Family Business Review.

Professor Sacristan kindly shared some additional information about the article.

Who is the target audience for this article?

We hope this paper may be of interest to academics (especially those belonging to the family business field), but also to family firms’ stakeholders (shareholders, managers and employees).

What inspired you to be interested in this topic?

For the “classic” topic –family ownership, family control and performance- there was quite a lot written, but there was no clear answer. The empirical results varied for different institutional settings, samples, methodologies. This fact motivated us to try to understand the underlying reasons for the non-conclusive empirical evidence. Besides, we also observed that the role played in family firms by other significant shareholders had been barely studied.

Were there findings that were surprising to you?

In Spain, a country with a high presence of family ownership and family control among listed firms, we found that family ownership does not affect firm performance. What seems to matter is how the family participates in family control. We were also surprised to find that our findings differed from others reported for multi-country European studies and we were also surprised by the apparent monitoring role exercised by the second significant shareholder.

How do you see this study influencing future research and/or practice?

For researchers, we hope that our study will provide further evidence for critical thinking about family firm performance and the role of second significant shareholders. Besides, we think that our study points to some future possible studies that analyze some questions that have not been answered yet. For instance, why is it that the empirical results about the influence of family ownership and control on company performance may vary for different institutional settings and countries? Do the results vary for large and smaller family firms? Why do the results pertaining to the influence of family generations vary for different institutional settings and samples? How do other large shareholders interact with family CEOs and/or chairmen? Does it matter whether they are represented on the board? Is their influence on firm performance related to the institutional setting, industry, the type of large shareholder they are or their differential ownership holdings in comparison to the first large shareholder? Future analysis of these issues will add evidence to enhance our understanding of one of the most common organizations in worldwide stock markets: family firms.

All these questions have also implications for family firms stakeholders and as they may affect firm performance, also on analysts and future investors.

How does this study fit into your body of work/line of research?

This study continues our previous studies in the family business field and in the corporate governance field. In previous papers we studied the chains of control in ownership among family firms, family firms corporate governance structure. We think this study contributes to our line of research adding a deeper understanding of certain relations.

How did your paper change during the review process?

We received very constructive feedback from the reviewers and the editors. This encouraged us to revise our paper, to rewrite it making more explicit its contribution and its implications for researchers and practitioners. Our paper has really changed during this process, being now much more mature and showing better our implications. Definitively, our paper has improved during the review process.

What, if anything, would you do differently if you could go back and do this study again?

The only things that we would do differently relate to the writing of the paper, those that we have improved through the review process.