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Determinants of Firm Performance in Family Businesses

Berg, Bart-Jan van den (2014) Determinants of Firm Performance in Family Businesses.

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Abstract:A family business is a predominant form of a business, causing around half of a countries GDP. Nevertheless, the research towards family businesses have long been seen as irrelevant. This study contributes to the information regarding family businesses. Aim of the research is to provide a general definition of family businesses and to explain how the determinants of family businesses are influencing the firm’s financial performance. Three determinants will be investigated, namely ownership, governance, and management. Via linear regression the relationship will be analysed between the determinants and firm performance. Firm performance will be measured by using return on equity (ROE), return on assets (ROA), equity ratio, and liquidity ratio. For the research a sample of the fiftieth best performing Dutch family businesses are selected, measured by their annual turnovers. The results show that family ownership and governance is causing superior firm performance only if shareholders and supervisory board members from outside are present in the business. Meanwhile, when only family members serve in the board of directors/as CEO, the firm’s financial performance is better compared to businesses were also nonfamily members are serving in the directors board in a family business.
Item Type:Essay (Bachelor)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:International Business Administration BSc (50952)
Link to this item:http://purl.utwente.nl/essays/65349
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