Ownership structure and financial performance of Spanish port service companies

Abstract

The Spanish port system represents approximately 20% of the transport sector’s GDP. We analyse the impact of ownership structure, in particular the family characteristics of Spanish port services companies, on profitability. Our study reveals that the ownership of these companies is highly concentrated, with more than 80% having a dominant shareholder, while over 60% are in the hands of a family, which in most cases is the only shareholder. Of the port services themselves, we find that the most profitable one is pilotage, with an average Return on Assets (RoA) of 26%, while the least profitable port service is cargo handling (7.8%); the rest have similar returns, ranging between 12 and 14%. In terms of the ownership-profitability relationship, the results lead us to conclude that companies with one sole or dominant shareholder are more profitable. We show that profitability declines when the sole shareholder is a member of the family. We also find that companies in which the family maintains ownership in second or successive generations are more profitable than those of the first generation. These results suggest that the existence of other, non-family, shareholders reduces the negative influence of the family, and that the alleged greater degree of professionalization of managers in second and successive generations contributes to improving the results of family businesses. We believe our results are applicable to other family businesses outside the port domain.