The stock performance of family firms in the Portuguese market

Abstract

The aim of this study is to analyse the stock performance of family firms from 1999 to 2008 in the Portuguese stock market, where these kinds of firms are frequently found. Consistent with previous research, we employ a methodology based on a portfolio formation approach. Furthermore, we study the performance of individual stocks using a panel data analysis. Our findings show that family firms outperform nonfamily ones, especially those family firms of smaller size. These results are relevant for investors, academics and the professional managers of these companies.

Keywords:

• family firms
• founder effect
• size effect
• stocks return
• asset pricing

JEL Classification:

• G10
• G11

Notes

¹  It is also important to report empirical results from other data sets to check the robustness of the available results and to support the conviction that it is not due to a data-snooping problem (Lo and Mackinlay, 1990).

²  This definition is similar to those of Anderson and Reeb (2003), Villalonga and Amit (2006, 2010) and Sraer and Thesmar (2007).

³  See Pindado et al. (2008) among others.

⁴  According to the Family Firms’ Portuguese Association (APEF), around 70–80% of the Portuguese firms are family firms. For instance, about 50% of the components of the PSI 20 market index are family firms.

⁵  These approaches follow Pindado et al. (2008).