Family Shareholders

Family firms account for a large proportion of listed companies worldwide. The governance mechanisms of family firms deal with the specificities of their agency conflicts. For example, agency conflicts between shareholders and managers can be mitigated when the managers are themselves family members. The costs of agency conflicts between the family blockholding and minority shareholders, related to potential private benefits, can be offset by more effective monitoring, while a specific agency conflict related to relations between the family at large and family shareholders can emerge. The governance mechanisms put in place seem effective, since family firms appear to perform better than non-family firms. But they are also less diversified, less innovative and more sensitive to the social climate in the company. Their financial decisions reflect their shareholders' concern to preserve their control, which involves, in particular, long-term relationships with other stakeholders. This article provides a review of research findings on these topics.