Research Article
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Year 2022, Volume: 15 Issue: 1, 123 - 124, 30.07.2022
https://doi.org/10.17261/Pressacademia.2022.1590

Abstract

References

  • Aronoff, C., & Ward, J. (2016). Family business governance: Maximizing family and business potential. Springer.
  • Bartholomeusz, S., & Tanewski, G. A. (2006). The relationship between family firms and corporate governance. Journal of Small Business Management, 44(2), 245-267.
  • Black, F. (1993). Beta and return. Streetwise: the best of the Journal of Portfolio Management, 74, 125-137.
  • Brenes, E. R., Madrigal, K., & Requena, B. (2011). Corporate governance and family business performance. Journal of Business Research, 64(3), 280-285.
  • Burkart, M., Panunzi, F., & Shleifer, A. (2003). Family firms. Journal of Finance, 58(5), 2167-2201.
  • Colli, A., & Rose, M. (2008). Family business. Oxford handbook of business history, 194-218.
  • Donnelley, R. G. (1988). The family business. Family Business Review, 1(4), 427-445.
  • Gallo, M. A., & Pont, C. G. (1996). Important factors in family business internationalization. Family Business Review, 9(1), 45-59.
  • Gallo, M. A., & Vilaseca, A. (1996). Finance in family business. Family Business Review, 9(4), 387-401.
  • Gibb Dyer Jr, W., & Sánchez, M. (1998). Current state of family business theory and practice as reflected in family business review 1988-1997. Family Business Review, 11(4), 287-295.
  • Kellermanns, F. W., & Eddleston, K. A. (2006). Corporate entrepreneurship in family firms: A family perspective. Entrepreneurship Theory and Practice, 30(6), 809-830.
  • Litz, R. A., Pearson, A. W., & Litchfield, S. (2012). Charting the future of family business research: Perspectives from the field. Family Business Review, 25(1), 16-32.
  • Mandelker, G. (1974). Risk and return: The case of merging firms. Journal of Financial Economics, 1(4), 303-335.
  • Mankiw, N. G., & Shapiro, M. D. (1984). Risk and return: Consumption versus market beta (No. w1399). National Bureau of Economic Research.
  • Olson, P. D., Zuiker, V. S., Danes, S. M., Stafford, K., Heck, R. K., & Duncan, K. A. (2003). The impact of the family and the business on family business sustainability. Journal of Business Venturing, 18(5), 639-666.
  • Pettengill, G. N., Sundaram, S., & Mathur, I. (1995). The conditional relation between beta and returns. Journal of Financial and Quantitative Analysis, 30(1), 101-116.
  • Phuoc, L. T., Kim, K. S., & Su, Y. (2018). Reexamination of estimating beta coecient as a risk measure in CAPM. The Journal of Asian Finance, Economics and Business, 5(1), 11-16.
  • Poza, E. J. (2013). Family Business. Cengage Learning.
  • Sharma, P. (2004). An overview of the field of family business studies: Current status and directions for the future. Family Business Review, 17(1), 1-36.
  • Uhlaner, L. M., Kellermanns, F. W., Eddleston, K. A., & Hoy, F. (2012). The entrepreneuring family: A new paradigm for family business research. Small Business Economics, 38(1), 1-11.
  • Villalonga, B., Amit, R., Trujillo, M. A., & Guzmán, A. (2015). Governance of family firms. Annual Review of Financial Economics, 7, 635-654.
  • Zachary, R. K. (2011). The importance of the family system in family business. Journal of Family Business Management, 10(2), 223-241.

WHY INVEST GLOBALLY IN FAMILY FIRMS?

Year 2022, Volume: 15 Issue: 1, 123 - 124, 30.07.2022
https://doi.org/10.17261/Pressacademia.2022.1590

Abstract

Purpose- Family firms have a significant economic role in many countries around the world. Family firms make a significant contribution to
World GDP and employ a significant part of the global workforce. The scope of this study covers the top 25 largest and publicly owned family
firms announced by Ernst & Young’s 2021 Report for Family Businesses. These 25 family firms generated more than 2 trillion USD and
employed 6.5 million in 2021. This empirical study aims to investigate the excess stock returns of family firms over the related country stock
market indexes and the risks (betas) for the period between 2002 and 2021. Therefore, this study explores the question of “why invest
globally in family firms and whether this investment pays off with higher returns and less risk”.
Methodology- The World's Largest Family Companies" list is published every other two years by Ernst & Young and the last issue was
published in 2021. The world’s largest family companies list includes both private and publicly owned family firms. This study employs 25
world’s largest family firms after the exclusion of privately held family firms. The monthly stock prices of family firms, related country stock
market index values, and global stock market index values are obtained from Refinitiv Eikon (Reuters) database for the period between 2002
and 2021 (20 years). Therefore, a total of 9120 observations are extracted for this empirical study. Eviews-10 is utilized for all econometric
analysis.
Findings- This study investigates whether an individual or intuitional investor can earn more than the average return of the stock markets by
investing in publicly traded family firms meanwhile exposing less risk. The empricial results reveal that Maersek shows 354% (beta of 1.18)
excess return over the 20 year period and followed by Hanwha with a 335% (beta of 0.69) excess return. Later, all family firms are grouped
based on country of headquartered and 7 country portfolios are formed. The highest excess returns are provided by South Koean portfolio
(an excess return of 189% with a beta of 0.83) and it is followed by Indian portfolio (an excess return of 174% with a beta of 1.0). Finaly, a
best performer portfolio is formed by the 10 family firms with highest excess returns. This portfolio provides a 131% excess return with a
beta of 1.18 over 20-year peirod.
Conclusion- The empirical results show that the individual firm returns and portfolio returns of family firms are higher than the returns of
the stock market indexes. Those who invest in family businesses get higher returns with less risk. Investments in publicly traded family firms
pay off.

References

  • Aronoff, C., & Ward, J. (2016). Family business governance: Maximizing family and business potential. Springer.
  • Bartholomeusz, S., & Tanewski, G. A. (2006). The relationship between family firms and corporate governance. Journal of Small Business Management, 44(2), 245-267.
  • Black, F. (1993). Beta and return. Streetwise: the best of the Journal of Portfolio Management, 74, 125-137.
  • Brenes, E. R., Madrigal, K., & Requena, B. (2011). Corporate governance and family business performance. Journal of Business Research, 64(3), 280-285.
  • Burkart, M., Panunzi, F., & Shleifer, A. (2003). Family firms. Journal of Finance, 58(5), 2167-2201.
  • Colli, A., & Rose, M. (2008). Family business. Oxford handbook of business history, 194-218.
  • Donnelley, R. G. (1988). The family business. Family Business Review, 1(4), 427-445.
  • Gallo, M. A., & Pont, C. G. (1996). Important factors in family business internationalization. Family Business Review, 9(1), 45-59.
  • Gallo, M. A., & Vilaseca, A. (1996). Finance in family business. Family Business Review, 9(4), 387-401.
  • Gibb Dyer Jr, W., & Sánchez, M. (1998). Current state of family business theory and practice as reflected in family business review 1988-1997. Family Business Review, 11(4), 287-295.
  • Kellermanns, F. W., & Eddleston, K. A. (2006). Corporate entrepreneurship in family firms: A family perspective. Entrepreneurship Theory and Practice, 30(6), 809-830.
  • Litz, R. A., Pearson, A. W., & Litchfield, S. (2012). Charting the future of family business research: Perspectives from the field. Family Business Review, 25(1), 16-32.
  • Mandelker, G. (1974). Risk and return: The case of merging firms. Journal of Financial Economics, 1(4), 303-335.
  • Mankiw, N. G., & Shapiro, M. D. (1984). Risk and return: Consumption versus market beta (No. w1399). National Bureau of Economic Research.
  • Olson, P. D., Zuiker, V. S., Danes, S. M., Stafford, K., Heck, R. K., & Duncan, K. A. (2003). The impact of the family and the business on family business sustainability. Journal of Business Venturing, 18(5), 639-666.
  • Pettengill, G. N., Sundaram, S., & Mathur, I. (1995). The conditional relation between beta and returns. Journal of Financial and Quantitative Analysis, 30(1), 101-116.
  • Phuoc, L. T., Kim, K. S., & Su, Y. (2018). Reexamination of estimating beta coecient as a risk measure in CAPM. The Journal of Asian Finance, Economics and Business, 5(1), 11-16.
  • Poza, E. J. (2013). Family Business. Cengage Learning.
  • Sharma, P. (2004). An overview of the field of family business studies: Current status and directions for the future. Family Business Review, 17(1), 1-36.
  • Uhlaner, L. M., Kellermanns, F. W., Eddleston, K. A., & Hoy, F. (2012). The entrepreneuring family: A new paradigm for family business research. Small Business Economics, 38(1), 1-11.
  • Villalonga, B., Amit, R., Trujillo, M. A., & Guzmán, A. (2015). Governance of family firms. Annual Review of Financial Economics, 7, 635-654.
  • Zachary, R. K. (2011). The importance of the family system in family business. Journal of Family Business Management, 10(2), 223-241.
There are 22 citations in total.

Details

Primary Language English
Subjects Finance, Business Administration
Journal Section Articles
Authors

Suat Teker This is me 0000-0002-7981-3121

Dilek Teker This is me 0000-0002-3893-4015

Esin Demırel 0000-0003-4257-6780

Publication Date July 30, 2022
Published in Issue Year 2022 Volume: 15 Issue: 1

Cite

APA Teker, S., Teker, D., & Demırel, E. (2022). WHY INVEST GLOBALLY IN FAMILY FIRMS?. PressAcademia Procedia, 15(1), 123-124. https://doi.org/10.17261/Pressacademia.2022.1590
AMA Teker S, Teker D, Demırel E. WHY INVEST GLOBALLY IN FAMILY FIRMS?. PAP. July 2022;15(1):123-124. doi:10.17261/Pressacademia.2022.1590
Chicago Teker, Suat, Dilek Teker, and Esin Demırel. “WHY INVEST GLOBALLY IN FAMILY FIRMS?”. PressAcademia Procedia 15, no. 1 (July 2022): 123-24. https://doi.org/10.17261/Pressacademia.2022.1590.
EndNote Teker S, Teker D, Demırel E (July 1, 2022) WHY INVEST GLOBALLY IN FAMILY FIRMS?. PressAcademia Procedia 15 1 123–124.
IEEE S. Teker, D. Teker, and E. Demırel, “WHY INVEST GLOBALLY IN FAMILY FIRMS?”, PAP, vol. 15, no. 1, pp. 123–124, 2022, doi: 10.17261/Pressacademia.2022.1590.
ISNAD Teker, Suat et al. “WHY INVEST GLOBALLY IN FAMILY FIRMS?”. PressAcademia Procedia 15/1 (July 2022), 123-124. https://doi.org/10.17261/Pressacademia.2022.1590.
JAMA Teker S, Teker D, Demırel E. WHY INVEST GLOBALLY IN FAMILY FIRMS?. PAP. 2022;15:123–124.
MLA Teker, Suat et al. “WHY INVEST GLOBALLY IN FAMILY FIRMS?”. PressAcademia Procedia, vol. 15, no. 1, 2022, pp. 123-4, doi:10.17261/Pressacademia.2022.1590.
Vancouver Teker S, Teker D, Demırel E. WHY INVEST GLOBALLY IN FAMILY FIRMS?. PAP. 2022;15(1):123-4.

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