The influence of family ownership in the profitability of vertically integrated companies. Evidence from the Spanish agri-food industry

The aim of this paper is to analyse whether the family control exerts a significant influence on profitability in agri-food companies that have been vertically integrated. This assumption is based on the idea that family-owned firms better overcome the internal conflict that arises in a company by reducing transaction costs. We have analysed the determinants of the profitability and its annual increase, considering the kind of company and its sector. Our results show that family firms tend to perform better, both from an economic and a financial perspective, than their counterparts, obtaining higher levels of efficiency with lower levels of debt. These factors lead to a higher profitability of family firms mainly attributable to the reductions of costs and financial expenses. Even though efficiency and size tend to grow if the family business is also vertically integrated, its levels of financial risk and commercial credit also increase and its sales margin decreases, which cause a trend to decrease in its profitability. These trends are independent of the year and the subsector.