Is family business beautiful? Evidence from Italian stock market

In light of the large number of listed family firms that operate in and contribute to the Italian economy, this paper tries to provide evidence and indications on their role in comparison with their non-family counterparts. The analysis adopts two perspectives. From the agency perspective, some recent literature on the links between investor protection and governance profiles argues that family members are more willing than other shareholders to divert private benefits in countries, like Italy, with a poor legal framework: the question is empirically puzzling. From the stewardship perspective, the degree of familiness affects the stewardship attitude of the firm: we do not find that family firms perform worse or better than non-family ones. Some evidence is found in relation to the entrenchment effect: in family firms with members as CEOs, the performance seems to be significantly lower. The stewardship attitude, and not familiness per se, does matter: moderate levels of stewardship improve performance and facilitate risk-taking, while extreme levels (i.e. , on the one hand, widely held ownership in non-family firms, or ownership fragmentation among descendants in family firms; on the other hand, close ownership/boards or family members as CEOs) worsen performance.