Post-acquisition performance of family owned firms and the effect of separating concentrated decision-making and risk- bearing functions: Evidence from Norway

Abstract

This thesis examines the financial performance of family firms transition to nonfamily firms and the effect of having an active family ownership. The analysis is based on Norwegian unlisted firms in the period of 2000-2018, from the database of CCGR. We test for differences in the firms’ performance prior to our specified event (e.g., ownership change) to the performance following the event, using univariate testing and regression. Our findings show that family firms vastly outperform nonfamily firms, and the acquirers of family firms are not able to maintain the high performance following the acquisition. This thesis furthermore finds evidence for lower performance after acquisition when the family control is greater. We argue that acquirers should consider the observed decrease in performance when valuating such firms.