The Performance of Family Firms During Crisis Periods: The Case of Greece
DOI:
https://doi.org/10.24310/ejfbejfb.v12i1.13020Keywords:
Family business, Performance, Ownership, CEO, Board of directors, Financial crisisAbstract
This paper examines the effect of the family involvement in the performance of Greek listed companies, during the Greek financial crisis. The involvement of family in firm’s ownership, management and governance along with the firm’s age constitute the unified framework that describe the family influence on the enterprise. The main contribution of this paper is the investigation of a research period when Greece faced an unprecedented economic 9 year crisis that affected all sectors of the economy, with 72% of listed companies showing a decrease in revenue and the total capitalization of the Greek Stock Exchange shrinking by 70%. No previous study has incorporated performance data on listed companies during a corresponding financial crisis with large fluctuations in all performance indicators and a high volatility in the national economy. The sample of the research includes 80 family firms listed in the Greek Stock Exchange. The findings illustrate a better performance for family firms with lower family ownership and prove a stronger performance in younger family businesses. The results of the study do not confirm the positive involvement of family members, through management (CEO) and governance (BoD) positions in the family business performance.
Downloads
Metrics
References
Agrawal, A., & Knoeber, C. R. (1996). Firm performance and mechanisms to control agency problems between managers and shareholders. Journal of Financial and Quantitative Analysis, 31(3), 337-398. https://doi.org/10.2307/2331397
Anderson, R. C., & Reeb, D. M. (2003). Founding-family ownership and firm perfor-mance: Evidence from the S&P 500. Journal of Finance, 58(3), 1301–1327. https://doi.org/10.1111/1540-6261.00567
Anderson, R. C., & Reeb, D. M. (2004). Board composition: balancing family influence in S&P 500 firms. Administrative Science Quarterly, 49(2), 209-237. https://doi.org/10.2307/4131472
Andres, C. (2008). Large shareholders and firm performance. An empirical examination of founding-family ownership. Journal of Corporate Finance, 14(4), 431–445. https://doi.org/10.1016/j.jcorpfin.2008.05.003
Barbera, F., & Moores, K. (2013). Firm ownership and productivity: a study of family and non-family SMEs. Small Bussiness Economics, 40, 953–976. https://doi.org/10.1007/s11187-011-9405-9
Barclay, M. J., & Holderness, C. G. (1989). Private benefits from control of public corporations. Journal of Financial Economics, 25(2), 371–395. https://doi.org/10.1016/0304-405X(89)90088-3
Barnes, L. B., & Hershon, S. A. (1976). Transferring power in the family business. Harvard Business Review, 54(4), 105-114.
Barontini, R., & Caprio, L. (2006). The effect of family control on firm value and performance: evidence from continental Europe. European Financial Management, 12(5), 689–723. https://doi.org/10.1111/j.1468-036X.2006.00273.x
Baysinger, B., & Butler, H. N. (1985). Corporate governance and the board of directors: Performance effects of changes in board composition. Journal of Law, Economics, and Organizations, 1(1), 101- 24. https://doi.org/10.1093/oxfordjournals.jleo.a036883
Becker, G. S. (1974). A theory of social interactions. Journal of Political Economy, 82(6), 1063–1093. https://doi.org/10.1086/260265
Bertrand, M., & Schoar, A. (2006). The role of family in family firms. Journal of Economic Perspectives, 20(2), 73-96. https://doi.org/10.1257/jep.20.2.73
Block, J. H., Jaskiewicz, P., & Miller, D. (2011). Ownership versus management effects on performance in family and founder companies: a Bayesian reconciliation. Journal of Family Business Strategy, 2(4), 232–245. https://doi.org/10.1016/j.jfbs.2011.10.001
Chrisman, J. J., Chua, J. H., & Litz, R. A. (2004). Comparing the agency costs of family and non–family firms: conceptual issues and exploratory evidence. Entrepreneurship Theory and practice, 28(4), 335-354. https://doi.org/10.1111/j.1540-6520.2004.00049.x
Chrisman, J. J., Chua, J. H., & Sharma, P. (2005). Trends and directions in the development of a strategic management theory of the family firm. Entrepreneurship Theory and Practice, 29(5), 555-576. https://doi.org/10.1111/j.1540-6520.2005.00098.x
Chrisman, J. J., Steier, L. P., & Chua, J. H. (2008). Toward a theoritical basis for understanding the dynamics of strategic performance in family firms. Entrepreneurship Theory and Practice, 32(6), 935-947. https://doi.org/10.1111/j.1540-6520.2008.00264.x
Chu, W. (2009). The influence of family ownership on SME performance: evidence from public firms in Taiwan. Small Bussiness Economics, 33, 353–373. https://doi.org/10.1007/s11187-009-9178-6
Chu, W. (2011). Family ownership and firm performance: Influence of family management, family control, and firm size. Asia Pacific Journal of Management, 28(4), 833–851. https://doi.org/10.1007/s10490-009-9180-1
Cucculelli, M., & Micucci, G. (2008). Family succession and firm performance: Evidence from Italian family firms. Journal of Corporate Finance, 14(1), 17–31. https://doi.org/10.1016/j.jcorpfin.2007.11.001
Daily, C. M., & Dollinger, M. J. (1992). An empirical examination of ownership structure in family and professionally-managed firms. Family Business Review, 5(2), 117–136. https://doi.org/10.1111/j.1741-6248.1992.00117.x
Daily, C. M., Johnson, J. L., Ellstrand, A. E., & Dalton, D. R. (1998). Compensation committee composition as a determinant of CEO compensation. Academy of Management Journal, 41(2), 209-220. https://doi.org/10.5465/257103
Dalton, D. R., Daily, C. M., Ellstrand, A. E., & Johnson, J. L. (1998). Meta-analytic reviews of board composition, leadership structure and financial performance. Strategic Management Journal, 19(3), 269-290. https://doi.org/10.1002/(SICI)1097-0266(199803)19:3<269::AID-SMJ950>3.0.CO;2-K
Danes, S. M., Stafford, K., Haynes, G., & Amarapurkar, S. S. (2009). Family capital of family firms: bridging human, social, and financial capital. Family Business Review, 22(3), 199-216. https://doi.org/10.1177/0894486509333424
Davis, J. H. (1997). Toward a stewardship theory of management. Academy Management Review, 22(1), 20-47. https://doi.org/10.2307/259223
Davis, J. A., & Tagiuri, R. (1989). The influence of life stage on father?son work relationships in family companies. Family Business Review, 2(1), 47-74. https://doi.org/10.1111/j.1741-6248.1989.00047.x
Davis, J. H., Allen, M. R., & Hayes, H. D. (2010). Is blood thicker than water? A study of stewardship perceptions in family business. Entrepreneurship Theory and Practice, 34(6), 1093–1115. https://doi.org/10.1111/j.1540-6520.2010.00415.x
De Andres, P. Azofra, V., & Lopez, F. (2005). Corporate boards in OECD countries: size, composition, functioning and effectiveness. Corporate Governance: An International Review, 13(2), 197-210. https://doi.org/10.1111/j.1467-8683.2005.00418.x
Donckels, R., & Fröhlich, E. (1991). Are family businesses really different? European experiences from STRATOS. Family Business Review, 4(2), 149-160. https://doi.org/10.1111/j.1741-6248.1991.00149.x
Donnelley, R. G. (1988). The family business. Family Business Review, 1(4), 427-445. https://doi.org/10.1111/j.1741-6248.1988.00427.x
Dyer, W. G. Jr. (2006). Examining the ‘‘family effect’’ on firm performance. Family Business Review, 19(4), 253–273. https://doi.org/10.1111/j.1741-6248.2006.00074.x
Eddleston, K. A., & Kellermanns, F. W. (2007). Destructive and productive family relationships: a stewardship theory perspective. Journal of Business Venturing, 22(4), 545–565. https://doi.org/10.1016/j.jbusvent.2006.06.004
Eddleston, K. A., Kellermanns, F. W., & Zellweger, T. M. (2012). Exploring the entrepre-neurial behavior of family firms: does the stewardship perspective explain differ-ences? Entrepreneurship Theory and Practice, 36(2), 347–367. https://doi.org/10.1111/j.1540-6520.2010.00402.x
Eisenhardt, K. M. (1989). Agency theory: an assessment and review. Academy of Management Review, 14(1), 57–74. https://doi.org/10.2307/258191
Fama, E. F., & Jensen, M. C. (1983). Separation of ownership and control. Journal of Law and Economics, 26(2), 327–349.
Filatotchev, I., Lien, Y. C., & Piesse, J. (2005). Corporate governance and performance in publicly listed, family-controlled firms: evidence from Taiwan. Asia Pacific Journal of Management, 22(3), 257–283. https://doi.org/10.1007/s10490-005-3569-2
García-Ramos, R., & García-Olalla, M. (2011). Board characteristics and firm perfor-mance in public founder-and nonfounder-led family businesses. Journal of Family Business Strategy, 2(4), 220–231. https://doi.org/10.1016/j.jfbs.2011.09.001
Giovannini, R. (2010). Corporate governance, family ownership and performance. Journal of Management & Governance, 14, 145-166. https://doi.org/10.1007/s10997-009-9093-x
Gómez-Mejía, L. R., Núñez-Nickel, M., & Gutiérrez, I. (2001). The role of family ties in agency contracts. Academy of Management Journal, 44(1), 81-95. https://doi.org/10.2307/3069338
Habbershon, T. G., Williams, M., & MacMillan, I. C. (2003). A unified systems perspective of family firm performance. Journal of Business Venturing, 18(4), 451-465. https://doi.org/10.1016/S0883-9026(03)00053-3
Habbershon, T. G., & Williams, M. L. (1999). A resource-based framework for assessing the strategic advantage of family firms. Family Business Review, 12(1), 1-25. https://doi.org/10.1111/j.1741-6248.1999.00001.x
Hamelin, A. (2013). Influence of family ownership on small business growth. Evidence from French SMEs. Small Bussiness Economics, 41, 563–579. https://doi.org/10.1007/s11187-012-9452-x
Herrera-Madueño J., Larran-Jorge M., & Sánchez-Gardey G., (2011). Effects of family ownership on SME performance. European Journal of Family Business, 1(2), 5-16. https://doi.org/10.24310/ejfbejfb.v1i2.4020
Huse, M. (2000). Boards od directors in SMEs: a review and research agenda. Entrepreneurship and Regional Development, 12(4), 271-290. https://doi.org/10.1080/08985620050177912
Jackling, B., & Johl, S. (2009). Board structure and firm performance: Evidence from India's top companies. Corporate Governance: An International Review, 17(4), 492-509. https://doi.org/10.1111/j.1467-8683.2009.00760.x
Jensen, M., & Meckling, W. H. (1976). The theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305– 360. https://doi.org/10.1016/0304-405X(76)90026-X
Kowalewski, O., Talavera, O., & Stetsyuk, I. (2010). Influence of family involvement in management and ownership on firm performance: evidence from Poland. Family Business Review, 23(1), 45–59. https://doi.org/10.1177/0894486509355803
Laffranchini, G., & Braun, M. (2014). Slack in family firms: evidence from Italy (2006-2010). Journal of Family Business Management, 4(2), 171-193. https://doi.org/10.1108/JFBM-04-2013-0011
Le Breton–Miller, I., Miller, D., & Steier, L. P. (2004). Toward an integrative model of effective FOB succession. Entrepreneurship Theory and Practice, 28(4), 305-328. https://doi.org/10.1111/j.1540-6520.2004.00047.x
Le Breton-Miller, I., & Miller, D. (2009). Agency vs. stewardship in public family firms: a social embeddedness reconciliation. Entrepreneurship Theory and Practice, 33(6), 1169-1191. https://doi.org/10.1111/j.1540-6520.2009.00339.x
Lee, J. (2006). Family firm performance: further evidence. Family Business Review, 19(2), 103–114. https://doi.org/10.1111/j.1741-6248.2006.00060.x
Lisboa, I. (2016). Impact of financial crisis and family control on earning management of Portuguese listed firms. European Journal of Family Business, 6(2), 118-131. https://doi.org/10.1016/j.ejfb.2017.06.002
Maury, B. (2006). Family ownership and firm performance: empirical evidence from Western European corporations. Journal of Corporate Finance, 12(2), 321–341. https://doi.org/10.1016/j.jcorpfin.2005.02.002
McConaughy, D. L., Walker, M. C., Henderson, G. V., Jr., & Mishra, C. S. (1998). Founding family controlled firms: efficiency and value. Review of Financial Economics, 7(1), 1– 19. https://doi.org/10.1016/S1058-3300(99)80142-6
McConaughy, D. L., & Phillips, G. M. (1999). Founders versus descendants: The profitability, efficiency, growth characteristics and financing in large, public, founding-family-controlled firms. Family Business Review, 12(2), 123–131. https://doi.org/10.1111/j.1741-6248.1999.00123.x
McKnight, P. J., & Mira, S. (2003). Corporate governance mechanisms, agency costs and firm performance in UK firms. http://ssrn.com/abstract=460300
Miller, D., & Le Breton-Miller, I. (2006). Family governance and firm performance: agency, stewardship, and capabilities. Family Business Review, 19(1), 73–87. https://doi.org/10.1111/j.1741-6248.2006.00063.x
Miller, D., Le Breton-Miller, I., Lester, R. H., & Cannella, A. A., Jr. (2007). Are family firms really superior performers? Journal of Corporate Finance, 13(5), 829–858. https://doi.org/10.1016/j.jcorpfin.2007.03.004
Miller, D., Le Breton-Miller, I., & Scholnick, B. (2008). Stewardship vs. stagnation: an empirical comparison of small family and non-family business. Journal of Management Studies, 45(1), 51–78. https://doi.org/10.1111/j.1467-6486.2007.00718.x
Morck, R. S. (1988). Management ownership and market valuation: An empirical analysis. Journal of Financial Ecocomics, 20(1), 293-315. https://doi.org/10.1016/0304-405X(88)90048- 7
Morck, R., Percy, M., Tian, G., & Yeung, B. (2005). The rise and fall of the widely held firm: a history of corporate ownership in Canada. In Morck, R. (Ed.): A history of corporate governance around the world: family business groups to professional managers (pp. 65–148). Chicago: University of Chicago Press.
Pearson, A. W., Carr, J. C., & Shaw, J. C. (2008). Toward a theory of familiness: a social capital perspective. Entrepreneurship Theory and Practice, 32(6), 949-969. https://doi.org/10.1111/j.1540-6520.2008.00265.x
Peng, M. & Jiang, Y. (2010). Institutions behind family ownership and control in large firms. Journal of Management Studies, 47(2), 253-273. https://doi.org/10.1111/j.1467-6486.2009.00890.x
Pindado, J., Requejo, I., & Torre, C. D. L. (2008). Does family ownership impact positively on firm value? Empirical evidence from Western Europe. IFERA Nyenrode, Summer 2008.
Poutziouris, P., Savva, C., & Chadjielias, E. (2015). Family involvement and firm performance: evidence from UK listed firms. Journal of Family Business Strategy, 6(1), 14-32. https://doi.org/10.1016/j.jfbs.2014.12.001
Saito, T. (2008). Family firms and firm performance: evidence from Japan. Journal of the Japanese and International Economies, 22(4), 620–646. https://doi.org/10.1016/j.jjie.2008.06.001
Salerno, D. (2019). Does the private equity financing improve performance in family SMEs? Journal of Family Business Management, 9(1), 110-124. https://doi.org/10.1108/JFBM-12-2017-0046
San Martin-Reyna, J. M., & Duran-Encalada, J. A. (2012). The relationship among family business, corporate governance and firm performance: evidence from the Mexican stock exchange. Journal of Family Business Strategy, 3(2), 106–117. https://doi.org/10.1016/j.jfbs.2012.03.001
Schepers, J., Voordeckers, W., Steijvers, T., & Laveren, E. (2014). The entrepreneurial orientation–performance relationship in private family firms: the moderating role of socioemotional wealth. Small Bussiness Economics, 43, 39–55. https://doi.org/10.1007/s11187-013-9533-5
Schulze, W. S., Lubatkin, M. H., Dino, R. N., & Buchholtz, A. K. (2001). Agency relationships in family firms: theory and evidence. Organization Science, 12(2), 99-116. https://doi.org/10.1287/orsc.12.2.99.10114
Schulze, W. S., Lubatkin, M. H., & Dino, R. N. (2003). Toward a theory of agency and altruism in family firms. Journal of Business Venturing, 18(4), 473–490. https://doi.org/10.1016/S0883-9026(03)00054-5
Sciascia, S., Mazzola, P., Astrachan, J. H., & Pieper, T. M. (2012). The role of family ownership in international entrepreneurship: exploring nonlinear effects. Small Bussiness Economics 38, 15–31. https://doi.org/10.1007/s11187-010-9264-9
Sciascia, S., & Mazzola, P. (2008). Family involvement in ownership and management: Exploring nonlinear effects on performance. Family Business Review, 21(4), 331–345. https://doi.org/10.1111/j.1741-6248.2008.00133.x
Sharma, P., Chrisman, J. J., & Chua, J. H. (1997). Strategic management of the family business: past research and future challenges. Family Business Review, 10(1), 1-35. https://doi.org/10.1111/j.1741-6248.1997.00001.x
Shleifer, A., & Vishny, R. W. (1997). A survey of corporate governance. Journal of Finance, 52(2), 737–783. https://doi.org/10.1111/j.1540-6261.1997.tb04820.x
Sirmon, D. G., & Hitt, M. A. (2003). Managing resources: Linking unique resources, management and wealth creation in family firms. Entrepreneurship Theory and Practice, 27(4), 339-358. https://doi.org/10.1111/1540-8520.t01-1-00013
Sraer, D., & Thesmar, D. (2007). Performance and behavior of family firms: Evidence from the French stock market. Journal of the European Economic Association, 5(4), 709–751. https://doi.org/10.1162/JEEA.2007.5.4.709
Tagiuri, R., & Davis, J. A. (1992). On the goals of successful family companies. Family Business Review, 5(1), 43-62. https://doi.org/10.1111/j.1741-6248.1992.00043.x
Tagiuri, R., & Davis, J. (1996). Bivalent attributes of the family firm. Family Business Review, 9(2), 199-208. https://doi.org/10.1111/j.1741-6248.1996.00199.x
Uhlaner, L. M., Floren, R. H., & Geerlings, J. R. (2007). Owner commitment and relational governance in the privately-held firm: an empirical study. Small Business Economics, 29(3), 275–293. https://doi.org/10.1007/s11187-006-9009-y
Villalonga, B., & Amit, R. (2006). How do family ownership, control and management affect firm value? Journal of Financial Economics, 80(2), 385-417. https://doi.org/10.1016/j.jfineco.2004.12.005
Weisbach, M. (1988). Outside directors and CEO turnover. Journal of Financial Economics, 20, 431-460. https://doi.org/10.1016/0304-405X(88)90053-0
Westhead, P., & Howorth, C. (2006). Ownership and management issues associated with family firm performance and company objectives. Family Business Review, 19(4), 301–316. https://doi.org/10.1111/j.1741-6248.2006.00077.x
Wiener-Fererhofer, A. (2017). Credit rating process: A distinction between family and non-family firms regarding their rating score. Journal of Family Business Management, 7(3), 256-290. https://doi.org/10.1108/JFBM-06-2017-0013
Williams Jr, R. (2018). Measuring family business performance: research trends and suggestions. Journal of Family Business Management, 8(2), 146-168. https://doi.org/10.1108/JFBM-12-2017-0047
Williams Jr, R., Pieper, T., Kellermanns, F., & Astrachan, J. (2019). Applying an organizational effectiveness approach to measure family business performance. Journal of Family Business Management, 9(3), 349-374. https://doi.org/10.1108/JFBM-01-2019-0002
Zahra, S. A., & Pearce, J. A. (1989). Boards of directors and corporate financial performance: a review and integrative model. Journal of Management, 15(2), 291-334. https://doi.org/10.1177/014920638901500208
Published
How to Cite
Issue
Section
License
Copyright generates two different rights: moral rights and patrimonial rights that EJFB recognizes and respects. Moral rights are those relating to the recognition of the authorship. They are rights of a personal nature that are perpetual, inalienable, unseizable and imprescriptible as consequence of the indivisible union of the author and his/her work. Patrimonial rights are those that can be derived from the reproduction, distribution, adaptation or communication of the work, among others.
Authors who publish in EJFB retain the copyright of their work and grant the right of its first publication to the journal in open access. EJFB is authorized to reproduce, distribute, disseminate or communicate the work under a CC BY-NC-SA 4.0 License. This means that you are free to share and adapt this work under the following terms:
- Attribution — You must give appropriate credit to its author(s), which implie the right to be reconognized and cited correctly.
- NonCommercial — You may not use the material for commercial purposes.
- ShareAlike — If you remix, transform, or build upon the material, you must distribute your contributions under the same license as the original.
.png){kind=logo}
27.png)
