Review of Managerial Science

, Volume 12, Issue 3, pp 771–801 | Cite as

Required and obtained equity returns in privately held businesses: the impact of family nature—evidence before and after the global economic crisis

  • Alfonso A. Rojo Ramírez
  • Maria J. Martínez Romero
Original Paper


This paper analyses the impact that family businesses have on the minimum rate of return required by owner–investors (k e ) and on the equity returns (ROEaT) obtained in privately held businesses. This influence is analysed for an economic growth period (2002–2007) and for a crisis period (2008–2013) in the European context. Moreover, our study also explores the family nature through the heterogeneity among family firms in their required and obtained equity returns by considering the degree of family involvement in the ownership and management. Our findings reveal that while family businesses always have a negative and significant impact on k e regardless of the economic environment, they only have a positive and significant impact on ROEaT in economic upturns. Thus, non-economic goals do not necessarily imply underperformance but may involve a lower cost of equity capital in privately held family businesses than in privately held non-family businesses, which also leads to differences in the value creation.


Privately held businesses Family nature Minimum rate of return Return on equity Value creation Socioemotional wealth 

JEL Classification

G31 L21 L25 


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Authors and Affiliations

  1. 1.University of AlmeríaAlmeríaSpain

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