Family-owned businesses were also better performers financially vis-Ã -vis non-family owned companies.
India, with a total of 111 companies and $839 billion total market capitalisation, continues to rank third globally in terms of number of family-owned companies, Credit Suisse said in its report released this week. It closely follows China (159 companies) and the US (121 companies).
The rating agency analysed over 1,000 family-owned, publicly-listed companies, and compared their 10-year performance to a control group of more than 7,000 non-family owned companies globally.
In the Non-Japan Asian region, China, India and Hong Kong dominate. Family businesses from these three territories have a combined market capitalisation of $2.85 trillion.
Family-owned businesses proved to be better performers financially vis-Ã -vis non-family owned companies. In 2017 alone, Non-Japan-Asia-based family-owned companies generated 25.63 percent greater cash flow return on investment (CFROI) than their non-family owned counterparts, and delivered a 4.2 percent outperformance in annual average share price return since 2006, Credit Suisse said in its report.
Indian family-owned companies generated a 13.9 percent annual average share price return since 2006, compared to 6 percent by their non-family-owned peers.
In terms of sector contributions to total market capitalisation, Tech (18 percent), Consumer Discretionary (16 percent) and Materials (15 percent) make up the top three sectors.
EugÃ¨ne Klerk, Head Analyst of Thematic Investments at Credit Suisse and the reportâ€™s lead author, said: This year we find family-owned businesses are continuing to outperform their peers in every region, every sector, whatever their size. We believe this is down to the longer-term outlook of family-owned businesses relying less on external funding and investing more in research and development.
â€œOur research on a global scale also suggests family-owned companies with special voting right structures perform relatively in line with those with ordinary shares, contrary to the fears expressed by many investors,â€� Klerk further added.
Asia-based family-owned companies generated much higher returns than their global peers, the report said. Out of the top 50 most profitable companies globally, 24 were from Asia, with a total market capitalisation of $748 billion.