National Bank of Canada unveils a study on Canadian family-controlled public companies
National Bank of Canada today unveiled the results of a research report on the sustainable outperformance of large Canadian family-controlled public companies. The proprietary NBC Canadian family Business Index highlighted in this report shows that Canadian family-controlled public companies have outperformed the S&P/TSX Composite Index by 120% over the past 10 years.
Titled “The Family Advantage”, the research report released today by National Bank Financial Markets was written by a team led by Pierre Fournier, Geopolitical Analyst, in collaboration with Angelo Katsoras, Daniel Straus and Ling Zhang. The index built includes 30 selected large Canadian family-controlled businesses across different industries and regions of the country.
“Family-controlled firms are a crucial pillar of the global economy, accounting for about 80% of companies worldwide,” explained Mr. Fournier. “Contrary to conventional wisdom, the larger public family firms have continued to thrive despite the rise of widely-held public corporations run by professional managers. They currently represent close to a fifth of the companies in the Fortune Global 500.”
Reasons behind this sustainable outperformance are the ability to take longer term decisions and implement long-term strategy without the pressure of short-term results, the study found. Moreover, family businesses tend to allocate capital more effectively, and generally with lower risk. Longer-term tenures for senior management, superior branding and reputation, the ability to make quicker decisions, and the loyalty of employees are some of the other factors which contribute to the outperformance of family firms, the study found.
“Family businesses are the backbone of the Canadian economy and this country is rich of many success stories. Today, many companies part of the S&P/TSX Composite Index are family-controlled which confirms the strong impact of Canadian families on the economy” said Vincent Joli-Coeur, Vice Chairman, Financial Markets, at National Bank.
The study also presents the key challenges of family businesses including the transition of power to new generations of family members and/or to professional managers, ensuring high standards of governance and transparency and the need for a strong and independent board of directors.
“The study unveils the positive impact of family values on the outperformance of large Canadian family-controlled public companies and addresses some of the myths and reality. Similar to the European, Asian and American families, Canadian families play a key role outside of their business. Many of these families invest in private companies and fuel startups via their family offices and are also major philanthropic players,” added Mr. Joli-Coeur.
The full report can be consulted at: The_family_advantage_National_Bank.pdf
About National Bank of Canada
With $216 billion in assets as at July 31, 2015, National Bank of Canada (nbc.ca), together with its subsidiaries, forms one of Canada’s leading integrated financial groups. The Bank has more than 20,000 employees and is widely recognized as a top employer. Its securities are listed on the Toronto Stock Exchange (TSX: NA). Follow the Bank’s activities via social media and learn more about its extensive community involvement at clearfacts.ca and commitment.nationalbank.ca.
Information (The telephone numbers provided below are for the exclusive use of journalists, other media representatives and shareholders.):
Manager, Public Affairs
National Bank of Canada
Tel.: 514 394-6500