The appeal of family firms

A new index tracks the performance of Canadian companies where a family or individual owns a controlling interest.

Yan Barcelo 5 October, 2018 | 5:00PM

According to management theories of the 1990s, family-controlled publicly listed firms were dodo birds, heading toward extinction. Yet, they survive -- and thrive, as a recent study by National Bank of Canada shows. In fact, they exhibit such outstanding long-term performance that NBC has launched in August an index tracking the group.

Out of the nearly 250 companies included in S&P/TSX Composite Index, the NBC study identifies 43 family-controlled businesses. Their outperformance is plain to see: from June 2005 to June 2018, the S&P/TSX Composite Index shows a total cumulative return of 132.7%, or 6.7% annualized; the NBC Canadian Family Index exhibits over the same period a total cumulative return of 206.2%, or 9.0% annualized.

"Until recently, there was a broad consensus that family companies were better suited to past eras," writes the report. In a modern rules-based economy, claimed proponents, "family-controlled businesses would be pushed to the margins by the rise of public corporations owned by diverse shareholders and run by professional managers," benefiting from a greater capacity to raise capital, attract highly qualified workers and earn higher profits.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Rogers Communications Inc59.97 CAD2.25
Rogers Communications Inc Class B57.35 CAD-0.27
Shaw Communications Inc Class A22.37 CAD-10.34
Shaw Communications Inc Class B22.95 CAD-0.26

About Author

Yan Barcelo  is a veteran financial and economic journalist with more than 30 years of experience, writing for many publications in Toronto and in Montreal, including CPA MagazineLes Affaires and Commerce.

© Copyright 2020 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Member User Agreement        Cookies