Family Influence and Firm Performance: Evidence from the Covid-19 pandemic

Abstract

The Covid-19 pandemic has spread with a speed and scale never seen before. Stock prices of all the market indices fell at a pace and level not seen since the Great Depression. This is the first study examining the financial performance of family and nonfamily firms around the world during the Covid-19 pandemic. Using a longitudinal sample of 791,928 firm-day observations for 3,882 firms in 43 countries and 10 industrial sectors, we show that financial performance of family firms has been significantly higher during the Covid-19 pandemic, as compared to their nonfamily counterparts. The economic impact of the family effect on firm performance is substantial: the return spread between family and nonfamily firms equals almost 8.7% given the growth in the Covid-19 cases worldwide. However, the magnitude of the effect depends on the type of family influence on the firm, geographical location and industry concentration. These findings have important implications for both management theory and practice.