Abstract

Evolution of Family Capitalism: A Comparative Study of France, Germany, Italy and the UK

Franks, Julian; Mayer, Colin; Volpin, Paolo; Wagner, Hannes

This paper analyzes the trade-off between family control and dispersed ownership along three dimensions. First, we emphasize the dynamic aspect of the trade-off by focusing on the evolution of ownership over time comparing 1996 with 2006. This enables us to study the stability of control as well as the frequency of changes of control. Second, we analyze ownership across countries (France, Germany, Italy and the UK) and compare outsider versus insider systems. Third, we examine how the trade-off applies to publicly traded firms on the one hand and to private firms on the other. We find that family control is less common in outsider than in insider systems not only among listed companies, which is well known, but also among private companies. Our explanation is that younger family firms in outsider systems are more inclined to sell out than in insider systems and this is reflected in the negative correlation between firm age and family ownership in outsider systems. Over the last decade family ownership has declined significantly in Continental Europe with a corresponding rise in widely held firms, as these countries have come to share more of the characteristics of outsider systems.
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