We test the hypothesis that ownership of a firm does not affect the firm's ability to seize market opportunities once decisions about productive structure are taken into account. By grouping firms in size clusters having a similar distance between the actual and the optimal size, we assess how the sensitivity of a firm's sales to market demand changes in response to differences in the owner's identity. We use data from a panel of 4696 continental western European firms over the period 1995–2010 and Eurostat 3-digit sectoral data on firm size distribution. Empirical evidence rejects the hypothesis of ownership irrelevance: family firms are less sensitive to market demand than other firms, in particular when the actual size of the firm is larger than optimal and in the case of both founder- and heir-run family firms.

This article contributes to the growing empirical literature on family firms by studying the impact of the founder–chief executive officer (CEO) succession in a sample of Italian firms. We contrast firms that continue to be managed within the family by the heirs to the founders with firms in which the management is passed on to outsiders. Family successions, that is, successions by the founder's heirs, are further analyzed by assessing the impact of the sectoral intensity of competition on the post-succession performance. This analysis also addresses the endogeneity in the timing of the CEO succession by controlling for a pure mean-reversion effect in the firm's performance. We find that the maintenance of management within the family has a negative impact on the firm's performance, and this effect is largely borne by the good performers, especially in the more competitive sectors. These results indicate that there is no inherent superiority of the family-firm structure and emphasize the importance of conducting an analysis of governance in a variety of institutional settings.

We employ firm-macro matched data on small and medium-size enterprises in the European Monetary Union to study the investment response to tight monetary policy shocks. We show that firms with higher leverage and longer debt maturity are more negatively responsive to monetary restrictions. Capital structure significantly interacts with monetary policy transmission: a leverage ratio one percentage point larger than average is associated with a semi-elasticity of investment to a nominal interest rate hike approximately 8 % higher two years following the monetary shock. Firm-level heterogeneity proves to be more pronounced in the presence of long-term—rather than short-term—indebtedness. We further argue that the investment response to monetary contractions is heterogeneous not only with respect to the firm-level financial structure but also in relation to the country-specific financial and productive conditions. Specifically, we show that the investment semi-elasticity to rate hikes significantly increases in countries characterized by higher frictions in accessing the credit market and in countries featured by either a larger share of small-size firms or a larger share of intangible assets.