While analysts lavish praise on entrepreneurs, they are often less generous to one of the legacies of entrepreneurship — the family firm. Many fear that founding families can too easily work to benefit their own interests at the expense of other shareholders — for example, by treating the company as a family employment service or a private bank.As a group, however, founding families are unjustly maligned, according to a new study of large, publicly traded U.S. firms. In “Founding-Family Ownership and Firm Performance: Evidence From the S&P 500,” slated for publication in the Journal of Finance, Ronald C. Anderson and David M. Reeb report that companies with significant levels of founding-family ownership or control typically outperform industry peers.The authors combed through proxy statements from 1992 to 1999 for 403 nonbank, nonutility members of the S&P 500 to identify companies that reported stakes held by founding-family members or had founding-family members serving on the board. Their search revealed 141 family firms, representing 35% of the sample, with an average family shareholding stake of 18%.T
