Family Italian Listed Firms: Comparison in Performances and Identification of Two Main Configurations

Purpose The purpose of this study is to underscore the impact of the family variable on performance. We were interested in understanding whether the differences between Family Firms (FFs) and Non Family Firms (NFFs) on the one hand, and between large FFs and medium-sized FFs on the other, were reflected in the performance achieved. Design/methodology/approach We considered a sample of 80 industrial companies listed on the Italian stock market (FTSE MIB and STAR indexes), and used mixed criteria to distinguish FFs and NFFs (Smyrnios-Romano et al., 1998). The empirical method allowed us to develop some research hypotheses by exploiting the Pearson correlation. Findings There are two main categories of FFs, which correspond to two different strategic and organizational categories, namely the FFs listed on the large capitalized companies index (FTSE MIB) and the FFs listed on the medium-capitalized companies index (STAR). Each kind of FFs (large FFs and medium-sized FFs) has a specific effect on profitability and financial performance. Specifically, if a company is medium-sized, family presence is a relevant variable in achieving better profitability and financial performance than NFFs of the same size; on the other hand, if the company expands to become a large one, the family presence is an irrelevant variable in terms of both profitability and financial leverage (debt ratio). Research limitations/implications Limitations of the study concern the definition of the sample, as we focused on the industrial sector, and the method adopted, as it could be integrated with some econometrical models. The implications of our paper are relevant for families and regulatory bodies because it helps them to better understand the effects of governance and of company size both on short-term and long-term performance. Moreover, the findings of the study can influence the decision-making process of investors in order to identify the long-term outperformers listed on the Italian stock exchange. Originality/value This study contributes to the literature on FFs by defining two different categories of FFs, namely large and medium-sized. It seems that larger companies record a weaker family influence on short-term profitability.