Singla, H K (2020) Does family ownership affect the profitability of construction and real estate firms? Evidence from India. Journal of Financial Management of Property and Construction, 25(1), pp. 107-124. ISSN 1366-4387
Abstract
Purpose: The study aims to find if family-owned construction and real estate firms in India are more profitable compared to non-family-owned construction and real estate firms. The study also examines if family ownership and institutional ownership are drivers of the firm profitability. Design/methodology/approach: The study uses data of 199 construction and real estate firms listed on the National Stock Exchange (NSE), India. The data pertains to a period of 13 years (2006-2018). The family firm is defined on the basis on ownership criteria, and the sample is divided into two groups, namely, family firms and non-family firms. The data is analyzed using a two-sample t-test assuming unequal variance and Prais–Winsten panel regression using correlated panels with corrected standard errors (PCSEs) procedure. Findings: The findings suggest that family-owned construction and real estate firms are slightly more profitable compared to non-family-owned construction and real estate firms; however, family firms command lesser valuation in the market. The reason for this lower valuation is the mismatch between family holding and institutional holding. A family firm’s profitability is primarily driven by institutional holding that acts as mitigation against the agency conflict. Originality/value: The paper is the first attempt to analyze the profitability of construction and real estate family firms, and compare it with non-family-owned construction and real estate firms.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | construction and real estate; construction firms; family ownership; profitability; real estate firms |
| Index terms: | construction firm, agency, mitigation, evidence, methodology, variance, mismatch, India, profitability, ownership, real estate |
| Subjects: | real estate economics, economic analysis, organization, evaluation and assessment methods, engineering problems, measurement and scaling, sociology, research methods, economics, financial risk, Geography |
| Topics: | Organizational Design, Urban Studies, Research Practice, Geographical Context, Engineering Principles, Cost Management, Business Strategy |
| Descriptive scope: | 4 PCTA |
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