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Family firms and financial performance. Evidence from Russia
In this paper, we investigate the relationship between family ownership and financial performance of Russian family companies. This study is motivated by the underexplored ownership structure of Russian enterprises, which was studied mainly from the perspective of state ownership. However, the number of family-owned and operated companies in Russia is increasing. We analyzed the data of 149 largest liquid publicly traded Russian companies that were listed or currently are traded on the Moscow Stock Exchange. We excluded some companies that had removed their annual reports due to current geopolitical circumstances and potential sanctions. As a result, our final sample consisted of 121 companies with 1,666 observations covering the period from 2000 to 2022. Our research methodology involves a two-way fixed effects model that accounts for industry and time effects. In this study, we arrived at the following conclusions. Firstly, a high degree of family ownership (more than 75% of the shares are held by families) can be beneficial for a company, both in terms of its profitability and market value. Secondly, this effect is most pronounced for companies under the age of 35. Additionally, we found that the stability of a company tends to increase with family management. However, family management does not significantly impact profitability and can even lead to contradictory results when considering different measures of market efficiency.