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Founding family ownership, stock market returns, and agency problems

Abstract : This paper explores the relationship between founding family ownership and stock market returns. Using the entire population of non-financial firms listed on the Swiss stock market for 2003–2013, we find that the stock returns of family firms are significantly higher than those of non-family firms after adjusting the returns for different firm characteristics and risk factors. Family firms generate an annual abnormal return of 2.8% to 7.1%. We also document that family firms potentially having more agency problems earn higher abnormal returns. Our evidence suggests that outside investors receive a premium for holding shares of these firms as they are exposed to the specific agency problems present in family firms.
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Submitted on : Wednesday, March 18, 2020 - 2:36:30 PM
Last modification on : Tuesday, April 12, 2022 - 4:12:03 PM

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Nicolas Eugster, Dušan Isakov. Founding family ownership, stock market returns, and agency problems. Journal of Banking & Finance, 2019, 107, pp.105600. ⟨10.1016/j.jbankfin.2019.07.020⟩. ⟨hal-02511063⟩



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