Abstract:
This empirical study provides new insights on private family firms’ performance during the
COVID-19 crisis, with an extra focus on family firms in industries who are hit by the COVID-
19 pandemic. The sample consists of 185.338 firm year observations from 21 West-European
countries, collected over the period from 2012 to 2020. The results show that, on average,
family firms outperform non-family firms in return on assets (ROA) by 0.41 percentage points
during the COVID-19 crisis. Using two alternative firm performance measures, return on equity
(ROE) and operating return on assets (OROA), family firms also outperform non-family firms
during the COVID-19 crisis, by respectively 1.95 and 0.34 percentage points. Large family
firms are mainly responsible for the outperformance. Robustness tests on excluding countries
and early year data also confirm the research results. Further, family firms in this study show a
capital structure based on less external finance, such as lower debt levels and a lower debt-toasset
ratio, which supports the pecking order theory. However, family firms do not outperform
non-family firms in sectors who are hit by the COVID-19 pandemic. The results in this study
expand existing literature by providing new evidence of private family firms’ performance
during the COVID-19 crisis.
