Corporate Governance

Corporate Governance and Performance in Public Listed, Family-Controlled Firms: An Empirical Evidence from Italian Corporate Sector

Ana Paula Matias Gama (Phd) University of Beira Interior Management and Economics Department Estrada do Sineiro, Pólo IV; 6200-209 Covilhã Telephone: 00351 275 319 600; amatias@ubi.pt

Cecília de Jesus Cardoso Rodrigues (Msc) University of Beira Interior Management and Economics Department ccardosorodrigues@gmail.com

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Research Proposal: Recent studies such as Demsetz (1983), Demsetz and Lehn (1985), Shleifer and Vishny (1986) Morck et al. (1988), La Porta et al. (1998, 1999), Holderness and Seehan (1988) among others, suggest that Berle and Mean´s (1932) model of widely disperse corporate ownership is not common, even in developed countries. In fact, large shareholders such as family are common in public traded firms around the world (La Porta et al. 1999; Burkart et al., 2003). Anderson and Reeb (2003) show that one-third of S&P 500 firms are family controlled. In Western Europe, the majority of public held firms remain family-controlled (La Porta et al., 1999; Faccio and Lang, 2002; Maury, 2006). Such controlling families often hold large equity stakes and frequently have executive representation (Holderness et al., 1999; Burkart et al., 2003). A number of studies suggest that ownership concentration creates a trade-off between incentive alignment and entrenchment effects (e.g. Shleifer and Vishny, 1997). In this context, the question of whether a family ownership hinders or facilitates firm performance becomes an empirical issue that is related to institutional and politico-regulatory factors (Anderson and Reeb, 2003). Family control seems to affect firm performance depending on the level of transparency and regulation in the country (La Porta et al., 1999). In well-regulated and transparent markets family ownership in public firms reduces agency problems without leading to severe losses in decisionmaking efficiency...