Foundation Ownership and Financial Performance: International Evidence

Abstract

We examine how foundation ownership relates to financial performance using a global sample of listed firms. Foundation-owned firms are controlled by non-profit entities with limited personal profit incentives, long-term horizons and no takeover pressure. Using both accounting-based (ROA) and market-based (Tobin’s q) performance measures, we find that foundation-owned firms perform at least as well as comparable family- and investor-owned peers, challenging conventional agency-theory predictions of inefficiency. They also achieve higher cumulative abnormal returns (CARs) around acquisition announcements. Our results are robust to a broad range of sensitivity tests, indicating that purposeful, non-profit ownership can be an economically efficient and viable governance model.