Family Firms and Financial Analyst Activity

Abstract

This paper examines the relationship between ownership structure, analyst coverage, and forecast error for the entire population of non-financial companies listed on the Swiss Exchange for the period 2003-2013. The results show a negative association between concentrated ownership and analyst coverage for both family firms and firms held by a nonfamily blockholder. Furthermore, forecasts of analysts are shown to be more accurate for family firms than for other firms. These results suggest that family ownership improves the quality of the firm’s information environment. This situation can be explained by a better alignment of interests between majority and minority shareholders among family firms.

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