Performance of family firms during the global financial crisis: Does governance matter?
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We investigate whether better corporate governance impacts the performance of family versus non-family firms during the Global Financial Crisis (GFC). If good governance matters then its impact should be amplified during times of exogenous financial shocks. Furthermore the impact of governance will be more pronounced for family firms as family firms are more resilient, have greater access to survival capital and have a longer term decision making focus. We find that family firms have better governance but family firms have a lower earnings weight in valuation models. However we do find that better governance increased the variability in value however family firms lowered the impact of earnings on variability in value during the GFC.
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