We investigate the relation between founding-family ownership and ¢rm performance.We ¢nd that family ownership is both prevalent and substantial; families are present in one-third of the S&P 500 and account for 18 percent of outstanding equity. Contrary to our conjecture, we ¢nd family ¢rms perform better than nonfamily ¢rms. Additional analysis reveals that the relation between family holdings and ¢rm performance is nonlinear and that when family members serve as CEO, performance is better than with outside CEOs. Overall, our results are inconsistent with the hypothesis that minority shareholders are adversely a¡ected by family ownership, suggesting that family ownership is an e¡ective organizational structure.

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