Family companies’ stock prices remain sluggish, while concerns are emerging that the advantage of high ROE is fading as corporate governance reforms advance across the broader market.
Family business (FB) companies are often owned and controlled by the founder’s family, and their ability to make swift decisions has traditionally been viewed as a source of earnings power. This analysis points to a relative narrowing of that advantage as corporate governance reforms advance.
It cites views from Tokio Marine Asset Management, which manages funds that invest in FB companies. The report says that treating companies as personal or family property and shifting toward defensive management are among the factors weakening the strength of high ROE.