THE PERFORMANCE OF FAMILY FIRMS: A STUDY OF “GOING PUBLIC” EFFECT IN PORTUGAL

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Abstract

The aim of this study is to investigate the pre and post going public process of the operational, social, and financial and dividend policy performance of twenty-five Portuguese family companies in most of the sectors of economic activity that went public through public share offering and direct sale. In a family firm, the business belongs to a family, in which, most of the family members work. This investigation develops a framework to conclude if the decision to open the capital by the traditional family firms to the investors, in general, had caused or not, improvements on the economic and financial health of those firms. On the economic side, we find relevant declines in profitability, operating efficiency and activity levels and an increase in capital investment and real output. On the employment side, we document an irrelevant decline on employment. On the financial side, we observe that the financial equilibrium of firms after going public was negatively affected. On the dividend side, we document an increase in the dividend payout. Lastly, our results are generally robust surviving the partition of the dataset into various sub-samples.

Keywords: Initial Public Offerings, Going Public, Separation of Ownership and Control, Economic, Social, Financial and Dividend Performance of Family Firms

Received: 19.01.2017

Accepted: 29.03.2017

How to cite this paper: Ferreira, J. V. (2017). The performance of family firms: A study of “going public” effect in Portugal. Corporate Ownership & Control, 14(4), 132-149. https://doi.org/10.22495/cocv14i4art12