Diversification and family control as determinants of performance: A study of listed business groups

The study analyses the individual and joint impact of family control and diversification on the performance of major Spanish corporations, considering the nature of the ultimate owner of non-family groups. The study uses a sample of ninety-nine Spanish corporations, each comprising a parent company listed on the stock exchange and a set of subsidiaries. Heckman's two-step correction is used to eliminate selection bias and the endogeneity of family ownership. Different models are contemplated in which we analyse the impact of both diversification and the family nature of a business on performance, established as Tobin's q-value. The results show how family control has a negative impact on Tobin's q-value, and that differences are greater between family groups and non-family groups controlled by banks and/or foreign agents. They also show how diversification does not affect the creation of value either individually or considering the possible moderating effect of family ownership.