Study Shines Light on the Long-Term Survival of Family Businesses.
April 30, 2018
Toronto – A new study using almost fifty years of historical data on Canadian public companies has found how family businesses stand out in three important ways.
The study from the Clarkson Centre for Board Effectiveness (CCBE) at the University of Toronto’s Rotman School of Management found that a typical Canadian family business survives eight years longer than a business without a family as a controlling entity. Secondly, family businesses have less turnover at the top, with CEOs that stay in the position for an average of four years longer than their counterparts. Finally, an investment in a family business carries significantly less risk on average than a non-family controlled company. This is in line with a previous CCBE study which revealed family businesses generating higher long-term returns to shareholders over time. The same trends were found in a comparison survey of family businesses and their counterparts in the United States and United Kingdom.
“Family companies live longer, are more stable and are less risky. They make up the majority of Canada’s economy so we have a strong incentive to keep studying them and understand the keys to their success,” says Matt Fullbrook, Manager of the Clarkson Centre for Board Effectiveness.
The CCBE gathered evidence for these findings by manually gathering data from historical industry publications, from 1969 to 2017, and supplementing with streams of historical market data.
The study builds on past examinations of family businesses from the CCBE and the centre plans to explore further aspects of the topic including if these findings extend to privately owned businesses.
The study was sponsored by Power Corporation of Canada.
The Clarkson Centre for Board Effectiveness (CCBE) at the Rotman School of Management, University of Toronto, is Canada’s leading independent corporate governance research body. CCBE’s mission is to create practical tools and insights to improve the effectiveness of boards of directors in all sectors. CCBE’s research focuses on effective disclosure, adoption of formal governance processes, pay for performance analysis and more.
The Rotman School of Management is part of the University of Toronto, a global centre of research and teaching excellence at the heart of Canada’s commercial capital. Rotman is a catalyst for transformative learning, insights and public engagement, bringing together diverse views and initiatives around a defining purpose: to create value for business and society. For more information, visit www.rotman.utoronto.ca.
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Rotman School of Management
University of Toronto