Discussion Paper of the Institute for Organisational Economics 8/2019

The Relative Performance of Family Firms Depending on the Type of Financial Market
Todor S. Lohwasser
August 2019



The purpose of this multi-level meta-analytic study is to examine the impact of the financial environment on general performance differences between family firms and non-family firms. The considerable cross-country variability of meta-analyses focusing on this relationship suggests noticeable differences between firm- and country-based characteristics. We trace this variance to differences in the respective development of the financial markets and banking systems. We show that family firms outperform non-family firms in market-based economies. We further show that family firms report worse performance measures in well-developed
financial markets. If, however, strong investor protection buttresses these already well-developed financial markets, family firms also outperform non-family firms. Our study has implications for banks, family firm owners, investors, and policy-makers.