Profitability of Foreign Family-Controlled Firms: The Case of American Depository Receipts

Journal of Business Issues, 2012 (1): 23-34

12 Pages Posted: 17 Feb 2013

See all articles by Omar A. Esqueda

Omar A. Esqueda

Tarleton State University - Department of Accounting, Finance, & Economics

Dave Jackson

University of Texas-Pan American - College of Business Administration - Department of Economics & Finance

Yongli Luo

Houston Baptist University, College of Business

Date Written: 2012

Abstract

We analyze the relative operating performance of Family Business’ list of the largest family-controlled firms versus non-family-controlled firms listed in the S&P 500. Our cross-sectional data includes over 400 firms and eleven years of data. We provide empirical evidence to demonstrate that family-controlled firms are more profitable than non-family-controlled firms. However, this is limited to family-firms trading as American Depository Receipts (ADR). We show that foreign family-controlled firms that trade as ADRs outperform U.S. family-controlled firms. It appears that family-owned firms have taken advantage of the reduction in capital barriers when they access U.S. stock exchanges. We conclude that foreign family-controlled firms are better able to exploit their growth opportunities compared with a sample of large U.S. firms.

Keywords: family firms, American depository receipts, operating performance

JEL Classification: G30, G32

Suggested Citation

Esqueda, Omar A. and Jackson, Dave and Luo, Yongli, Profitability of Foreign Family-Controlled Firms: The Case of American Depository Receipts (2012). Journal of Business Issues, 2012 (1): 23-34, Available at SSRN: https://ssrn.com/abstract=2219524

Omar A. Esqueda (Contact Author)

Tarleton State University - Department of Accounting, Finance, & Economics ( email )

Stephenville, TX 76402
United States
(254)968-9908 (Phone)

HOME PAGE: http://tarleton.edu

Dave Jackson

University of Texas-Pan American - College of Business Administration - Department of Economics & Finance ( email )

1201 W. University Drive
Edinburg, TX 78539-2999
United States

Yongli Luo

Houston Baptist University, College of Business ( email )

Houston, TX 77074-3298
United States
2816493163 (Phone)

HOME PAGE: http://www.hbu.edu

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