Family vs Non-Family Firms The Impact of Ownership Structure on Firm Performance

Abstract

This thesis investigates the impact of family ownership on firm performance in publicly listed Swedish companies between the years of 2020-2024. Using a dataset of 234 firms, we apply pooled panel data OLS regressions to examine how various amounts of family control, categorized as moderate control (25-33% vote ownership) and high control (≥33%) affect performance, measured through return on assets (ROA) and Tobin’s Q. We also examine the role of dual-class share structures, used as a proxy for disproportionate equity-to-control ratios. Contrary to much of the existing literature on the subject, our findings indicate a significant negative relationship between family control and performance. This effect is only found in firms with moderate family control. The presence of dual-class share structures was surprisingly found to have a positive relationship with ROA, challenging the idea that they always lead to increased agency costs. These results suggest that in the Swedish market, family control seems to hinder optimal firm value creation, likely due to increased agency costs and risk aversion among undiversified family owners. The findings have important implications, particularly for investors and scholars, as they seek an understanding in how ownership structures influence governance effectiveness.