Corporate Governance Practices of Family Firms in Europe and Firm Financial Performance

This study has four key objectives as follows: first, to test how family-controlled firms are associated with firm performance in Europe; second, investigate whether the blockholding influences firm performance; third, to compare firm performance of active family controlled firms with passive family controlled firms; and finally, to analyse the relationship between family ownership and firm performance. Data for this study comprise listed firms from 16 countries in Europe for the period 2006 to 2015. Our sample comprises more than 34% of listed firms that are family-controlled. Our results show that family-controlled firms' perform better than the nonfamily-controlled firms. However, blockholding tends to dampen firm performance, that is, especially when family control is greater than 40%, whereas, family control less than 30% tends to improve performance. Furthermore, firms that are active family controlled (family holding at least one of the top two officer positions) tends to have improve firm performance. These result suggest that family firm lowers the agency problem between the owners and managers, and active family control is good for family firm daily running