Capital structure and performance of French family-owned companies listed on the stock market.

Summary The objective of this thesis is to analyze the capital structure and performance of French family firms that go public. Based on a sample of 90 family firms belonging to the CAC All-Tradable index from 2010 to 2013, we find that the capital structure of family firms is characterized by a low level of debt with a preference for short-term debt over long-term debt. Moreover, the capital structure of family firms verifies the classical theories of financing, the 'market timing' hypothesis, the optimal debt ratio theory and the hierarchical financing theory. We then analyze the short and long term performance of French family firms going public. The results show the different expropriation techniques employed by the owners of family firms. At the time of the IPO, the majority of owners of family firms are both the CEOs and the chairmen of the boards of directors. After the IPO, the owners of family firms hold about 80% of the cash flow rights and we find that the difference between their cash flow rights and their voting rights has increased. The undervaluation on day one is around 2%, revealing that family businesses are correctly valued at issuance. Family businesses outperform the market index in the first three months of the issue and after the third year. We also find that the change in ownership and control rights before and after the IPO explains the short- and long-term performance in contrast to the governance mechanisms.