Are Eponymous Business Owners Less Likely to Disclose Company Finances Transparently?

Business owners often name their firms after themselves, a common practice seen in famous examples like Dyson in the U.K., Ben & Jerry’s in the U.S., and Bosch or Porsche in Europe. The connection between the owner and the business is particularly strong when the owner is still alive and the firm represents the majority of their personal wealth and income. However, disclosing a firm’s financial information can inadvertently reveal personal financial details, raising concerns about privacy. A study by Dr. Francisco Urzúa, a Reader in Finance at Bayes Business School, titled “Owner Exposure through Firm Disclosure,” investigates how owners of eponymous firms protect their personal privacy by avoiding full financial disclosure.

To understand the impact of owner privacy concerns on transparency, the study compares the financial disclosures of eponymous firms to their non-eponymous counterparts in a sample of German private firms. Germany has enforced mandatory financial disclosure since 2006, but prior to that, public disclosure was rare. Even after 2006, companies had discretion in determining the extent of their disclosure.

This study focuses on Germany due to its culture of financial privacy and the prevalent practice of information-sharing being exclusive and discreet. Moreover, Germany’s aversion to public displays of wealth and debt allows for an examination of whether eponymous owners avoid disclosure in socially stigmatized circumstances.

Using a large sample of German private firms, the study reveals that eponymous firms, especially those strongly associated with their owners, are more likely to avoid full financial disclosure compared to their non-eponymous peers in the same industry. Eponymous firms disclose fewer items and less information on profitability. Privacy concerns are particularly prominent when disclosure could reveal sensitive information associated with social stigmas such as immense wealth or high indebtedness. Eponymous owners are also more inclined to avoid disclosure in areas with a strong anti-capitalist sentiment, rural areas, and low-income regions. The study further finds that eponymous owners are more likely to change the name of their firms when forced to disclose financial information.

This preference for opacity is not limited to Germany. An international sample shows that eponymous owners in other countries also prefer to avoid disclosure under similar circumstances. Importantly, the study demonstrates that eponymous firms’ avoidance of disclosure only applies to public disclosure, not private disclosure.

Dr. Urzúa concludes, “These findings suggest that business owners are particularly concerned about privacy when it comes to disclosing sensitive or potentially stigmatizing financial information, especially in environments where income equality and reputation matter.”

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