Citywire - For Professional Investors

Register to get unlimited access to all of Citywire’s fund manager database. Registration is free and only takes a minute.

Revenue grows faster at founder-led companies

Revenue grows faster at founder-led companies

Founder-led listed companies are investing more aggressively in research and development (R&D), capital expenditure, and mergers and acquisitions, new findings from a Schroders research has revealed.

Sustainable investment analyst Ovidiu Patrascu said these firms grow revenues at a faster pace, and their share prices have outperformed peers over the past five years until December 2016.

When looking at specific sectors, Schroders found that founder-led companies operating in innovation intensive sectors such as internet, software, biotechnology and pharmaceuticals tend to invest more in R&D, capex and M&A than their peers.

In more capital intensive industries, such as hardware and semiconductors, founder-led companies tend to allocate capital more conservatively, and their share prices have generally outperformed their peers.

In mature but profitable industries, such as electronic and electrical equipment, founder-led firms allocate more capital but at relatively high levels of profitability. This leads to strong compounding power and share price outperformance.

The research also showed that growing tendency in founder-led firms is becoming common, with 30% of the companies listed globally over the past five years being led by their founders.

Schroders’ study is based on 3,600 non-financial companies with market capitalisations of over $500 million. Within those 3,600 firms, 70% of founder-led companies are listed in the US, followed by China (8%), Japan (7%) and Europe (6%) and the majority operate in the technology, pharmaceuticals and retail sectors.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Events
  • Citywire Asia Retreat 2016

    Citywire Asia Retreat 2016

  • Citywire Asia Retreat 2016

    Citywire Asia Retreat 2016

  • Citywire Asia Retreat 2016

    Citywire Asia Retreat 2016

  • Citywire Thailand 2016

    Citywire Thailand 2016

  • Citywire Thailand 2016

    Citywire Thailand 2016

  • Citywire Thailand 2016

    Citywire Thailand 2016

  • Citywire Hong Kong 2016

    Citywire Hong Kong 2016

  • Citywire Hong Kong 2016

    Citywire Hong Kong 2016

  • Citywire Hong Kong 2016

    Citywire Hong Kong 2016

  • Citywire Singapore 2016

    Citywire Singapore 2016

  • Citywire Singapore 2016

    Citywire Singapore 2016

  • Citywire Singapore 2016

    Citywire Singapore 2016

  • Citywire Singapore 2015

    Citywire Singapore 2015

  • Citywire Singapore 2015

    Citywire Singapore 2015

  • Citywire Hong Kong 2015

    Citywire Hong Kong 2015

  • Citywire Hong Kong 2015

    Citywire Hong Kong 2015

  • Citywire Asia 2014

    Citywire Asia 2014

  • Citywire Asia 2014

    Citywire Asia 2014