Governance of family companies: accepting the difference

Family companies offer clear advantages in terms of strategic stability, but specific governance risks can deter outside investors. We built a sample of 100 companies and an analytical framework differentiated according to family involvement. We applied this analytical framework to 4 companies that have the risks under control and to 4 with riskier profiles. We conclude that governance risk does not simply depend on the size of the family’s stake, but rather on its ability to institutionalise controls. Disciplined and predictable family share ownership can therefore be an opportunity for outside investors.