The relationship among family business, corporate governance and firm performance: Evidence from the Mexican stock exchange

This study aims to examine whether there are differences in performance between family and non-family firms, taking into account the peculiarities of the Mexican corporate governance system. We propose an analysis that allows us to conduct a comprehensive study and comparison between companies with different (i.e., family vs. non-family) ownership structures, distinguished by developed patterns of governance with heterogeneous characteristics. We also analyze the effects on firm performance depending on the degree of ownership concentration. We find that family firms adopt substantially different corporate governance structures to non-family firms. There is some evidence to suggest that these differentials ultimately impact upon firm performance.

► Family-owned firms on the Mexican Stock Exchange perform better than their non-family counterparts. ► Governance mechanisms have different effects on firm performance in family and non-family firms. ► In non-family firms, debt level and outside directors have a positive effect on firm performance. ► In family firms, debt level and outside directors have a negative effect on firm performance.