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The outperformance of family firms: the role of variance in earnings per share and analyst forecast dispersion on the Swiss market

abstract Recent studies provide empirical evidence that family firms are outperforming their non-family counterparts in terms of stock market performance. For the Swiss stock market we find that family firms indeed outperform their non-family counterparts after controlling for firm size and beta. In addition, our data shows that family firms display more stable earnings per share in contrast to their non-family counterparts. Furthermore we find that the variance of earnings per share positively affects analyst forecast dispersion. According to anomaly literature, lower analyst forecast dispersion has been found to induce higher excess return, which our data supports for the Swiss stock market. By linking variance of earnings per share, analyst forecast dispersion and stock performance we provide an insightful explanation for the excess stock market returns of family firms. In addition, our text extends the theory of dispersion effect with an additional empirical element, the variance of earnings per share.
   
type journal paper
   
keywords Family Firm, Stock Market Performance, Dispersion Effect, Variance in Earnings per Share
   
language English
kind of paper journal article
date of appearance 1-6-2007
journal Financial Markets and Portfolio Management
publisher Springer (Heidelberg)
ISSN 1555-4961
ISSN (online) 2373-8529
DOI 10.1007/s11408-007-0045-7
volume of journal 21
number of issue 2
page(s) 203-220
review double-blind review
   
citation Zellweger, T., Meister, R., & Fueglistaller, U. (2007). The outperformance of family firms: the role of variance in earnings per share and analyst forecast dispersion on the Swiss market. Financial Markets and Portfolio Management, 21(2), 203-220, DOI:10.1007/s11408-007-0045-7.