Keep it in the Family? A general analysis examining differences in corporate policies and performance between listed family firms and non-family firms in Scandinavia

Abstract

This paper investigates if there are differences in corporate policies and performance between listed family firms and non-family firms in Scandinavia. By utilising accounting- and market data from 1990 to 2020, we examine the firms’ investment policy, financial policy, organisational policy, and firm performance. By examining corporate policies, we intend to uncover differences in governance and management practices that may result in family firm outperformance. Our findings show that family firms outperform non-family firms in return on assets and operating return on assets. Furthermore, we discover that family firms have fewer acquisitions, have more debt, pay more dividends, and have less R&D and SG&A expenditures than non-family firms. We suggest that these differences are caused by lower agency costs, increased risk aversion, and a more long-term strategy in family firms than in non-family firms. We note that the findings of this paper may be affected by our family firm definition and endogeneity in the analysis.