|
The data concerning all family firms listed at the Italian
Stock Exchange between 2001 and 2005, show that agency theory
prescriptions and monitoring activities impact differently
on family firm value and profitability. Specifically, non-founder
family firms benefit from a low level of board and inside
ownership to a high level of stockholder and foreign investors
ownership, because they must face high agency costs. On
the contrary, founder family firms benefit from a high level
of board and insider ownership to a low level of stockholder
and foreign investor ownership owing to their context of
lower agency costs.
Romano et al. (2001) argue that typically firms attract
external financing in order to achieve full profit of the
business, but the family firms' context looks quite different
owing to the ownership control objectives and the need of
continuity of family involvement in the business, that characterize
the family firms' capital structure decision process.The Italian family business context is very specific, since,
as De Laurentis (2005); and Caselli (2005) note that firms
are often controlled and managed by families, for both large
companies and Small and Medium Enterprises (SMEs). This
control is very strong and frequently the firm management
is driven by family members' purposes. Nevertheless, as
Chami (2001) shows for an international sample, Italian
family businesses do not accuse consequences due to agency
costs and the whole organization is aligned to needs of
the owners (Giannetti, 2003; and Trento and Giacomelli,
2004), even if they must overcome much precarious situations
owing to their succession problems and dynasty troubles
(Caselli and Gennaioli, 2003).
When Caselli and Gatti (2006) examine the performance of
Italian Initial Public Offerings (IPOs) distinguishing between
family and non-family businesses, they find a weird situation.
In fact, they show a strong and general underperformance
of family firms, and underline the positive impact on long
run stock market performance of strong family involvement
but the negative influence of the firm age.These differences should be due to divergences in corporate
governance and ownership structure or to different agency
cost frameworks, in accordance to the findings of Berle
and Means (1932) as far as the ownership structure should
enable corporate management to realize the full potential
of corporate assets.
|
