In family we trust—In good and bad times

Abstract

This short report investigates the stock market behavior of Swiss companies during the COVID-19 pandemic. Results suggest that family firms performed better during the outbreak and post-lockdown periods than widely-held firms. Family firms also displayed a larger abnormal trading volume drop than widely-held companies. In size-sorted subsamples, the volume difference appears more pronounced for smaller firms. We explain these findings by family firms, especially smaller ones, predominantly attracting investors with a long-term horizon. Such investors are less likely to sell during market turmoil, making family firms not only less liquid but also less sensitive to market fluctuations.