Financial performance of eponymous firms in the Czech Republic

Abstract

Past literature suggests that firms that bear the name of the owners, also known as eponymous firms, have superior profitability. The goal of this paper is to test the differences in the financial performance indicators between eponymous and other Czech firms. In a sample of 17,833 privately held firms operating in the Czech Republic, owned by Czech individuals or families and having complete financial data for 2014–2017, we find that eponymous firms have a significantly higher return on assets. However, no difference in return on equity has been found. We also show that eponymous firms have lower asset turnover and labour productivity, use less debt financing and have greater liquidity. In this sense, their financial characteristics are close to those of family businesses. Overall, eponymous firms are younger than other firms, but there are no significant differences in the size of the firms. The results suggest that firms named after the founder are more likely to perform well.