Family companies are top stock market performers

Popular perception often associates family businesses with non-listed companies. However, this overlooks the fact that many family businesses are successful players on the stock market. Three family businesses – Henkel AG & Co. KGaA, Merck KGaA and Beiersdorf AG – belong to the DAX 30, Germany’s benchmark index.

On behalf of the Foundation for Family Businesses, the Center for Entrepreneurial and Financial Studies at the Technical University of Munich has examined the importance of stock market-listed family businesses. Their findings: over a ten year observation period, between one-third and one-half (depending on the calculation method) of all German companies listed in Frankfurt were family-owned.

A listed company is considered a family business when the family of the founder owns at least 25 percent of the voting rights and/or a member of the founder’s family is represented on the Management Board or Supervisory Board.

Just how successful family businesses are on the stock exchange is revealed by a look at the DAXplus® Family Index. The index comprises German and international companies listed in the Prime Standard of the Frankfurt Stock Exchange in which the founding family either holds at least a 25 percent share of the voting rights or sits on the Management Board or Supervisory Board with at least 5 percent of the voting rights. The DAXplus® Family 30 Index comprises the 30 largest and most liquid stocks in the DAXplus® Family Index.

One indicator for the performance of family businesses on the stock exchange is the GEX® (German Entrepreneurial Index). It contains all owner-managed companies listed in the Prime Standard that joined the stock exchange no more than ten years ago. Owner-managed companies are those whose Management Board and Supervisory Board members or their families hold between 25 and 75 percent of the voting rights.
 

* The graph is intended only as an example and no responsibility is assumed for the correctness of the information.

A look at the index’s performance shows that family businesses are comparatively successful on the stock exchange. The DAXplus® Family 30 Index rose by around 110 percent between December 2012 and December 2017. The DAX 30 Index, by comparison, rose just 73 percent.

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DAXplus® Family 30 and GEX® are registered trademarks of Deutsche Börse AG.