Spillovers from the international market and the performance of family firms: evidence from an emerging market

Abstract

This study analyzes the performance of Ecuadorian firms, depending on their ownership and corporate governance structure, when facing a shock with negative spillovers from the international market. Using data on 67,279 firm-year observations pertaining to 16,468 medium and large companies in Ecuador from 2011 to 2017, I find that firms that are family-owned and controlled suffer more from a negative internationally transmitted shock into the local economy. Furthermore, the results show that the greater negative impact of the shock on family firms could be driven either by their inertia to undertake divestitures or by their lower ability to access alternative sources of financing.