No one in Hong Kong needs to be told about the importance of family-run companies - more of them are listed here than on any other major stock exchange.
These companies and their investors will be pleased to read a new global study from Credit Suisse. The study shows that, between 2007 and this year, shares of family-controlled firms outperformed others by an average of 8 per cent. Reasons cited for this include the fact that family firms often bear the owner's name, add management value to their operations, tend to be concentrated in high-margin sectors (such as luxury goods and health care), and seem to have a better focus on the long term.
Other studies have highlighted how family-run companies benefit from continuity, commitment and shared knowledge, which are accrued over time.
The performance of family-controlled firms is, however, a vexed subject - other research contradicts the Credit Suisse study.
In 2003, three Chinese University professors (Larry Lang Hsien-ping, Low Chee-keong and Raymond So Wai-man) published a widely-quoted study that showed positive results for family ownership. Back then, some 81 per cent of the companies on the local bourse were family-controlled; that number has since been diluted by the influx of mainland state-owned enterprises, but family control remains a dominant feature of the Hong Kong exchange.
The Chinese University study found companies with a high degree of family ownership performed better, while those with a greater degree of family management achieved the best results. But it is important to note that better performance (as measured by return on assets) was registered by companies with a listed entity at the apex of their corporate structure. Some family conglomerates prefer to control their publicly-listed entities from a private company, whereas others tend to have a listed firm at the apex of their operations.
In Asia, most of the famous listed family-controlled conglomerates are first-generation entities - they are still run by the people who founded the firm. Even older established companies tend not to be older than the second generation.