Founding-Family Ownership and Firm Performance in the Finnish Settings

Abstract

I am investigating the interplay between firm performance and family ownership. My results suggest that family-firms are having a lower accounting performance and market valuation compared to nonfamily firms, when analyzing data on Nasdaq Helsinki from years 2012-2019. There seems to also be nonlinearities within this relation since my further analysis suggests that in Finnish companies, increase in the fractional ownership of founding family increases the accounting performance of a firm. However, as family’s equity holdings are low enough, there seems to be gains in the market valuation of the company, but as the ownership increases, this effect begins to taper off. Overall, my results are inconsistent with prior literature and the hypothesis that family ownership is an effective ownership structure.