The difference of investment efficiency between family and non-family firms: An international scope

Abstract

Due to the inconsistencies in their economic priorities, family firms and non-family firms are likely to operate and invest differently. In this study, we use a sample of international public companies to investigate whether there is a difference between family firms and non-family firms regarding their investment efficiency. We find that compared to non-family firms, family firms invest inefficiently. We also investigate the moderating role of country-level regulatory quality on the level of investment efficiency. We find that the association between family firms and investment inefficiency can be ameliorated when regulatory environments are taken into consideration. In addition, we document the role family ownership and gender diversity play in the main effect between family firm involvement and investment inefficiency.