(MONEY Magazine) – Who says you can't beat the market? Over the past 20 years, an index of some 200 companies controlled by members of the founding family was up 16.6%--more than two percentage points higher than the 14% return of Standard & Poor's 500-stock index.

Robert Kleiman, an associate professor of finance at Oakland University in Rochester, Mich., conducted the recent study with NetMarquee, a Needham, Mass. consulting firm for family businesses. He points out that managers at family-run firms take a longer view than the usual quarterly-earnings-obsessed corporate leaders. In addition, the companies usually have fewer lines of business than the four or five typical of S&P 500 giants, allowing managers to focus better on the bottom line.

Another study covering three years by Dan McConaughy, an assistant professor of finance at Rosary College in River Forest, Ill., was not conclusive about the stock performance of family-controlled companies. But his study showed that these firms are better run than their competitors. Net profit margins average about 6%, vs. 4% for nonfamily firms, and sales growth runs 21% annually, vs. 17%.

Two family-run companies that analysts currently like are Danaher Corp. (ticker symbol: DHR; recently traded on NYSE at $42.25; 0.2% yield) and Dollar General (DG; NYSE, $31.75; 0.6%). The chairman of Danaher, a $1.5 billion maker of tools and environmental controls, is Steven Rales, whose family owns about 39% of the common stock. Cliff Ransom of NatWest Securities sees continued earnings growth of 20%, which could boost the stock at least 20% to $51 over the next year. The CEO of Dollar General, which operates a chain of 2,600 self-service discount stores, is Cal Turner Jr., whose father and grandfather co-founded the $1.8 billion company. Analyst Barbara Miller of Alex. Brown believes that Turner's ability to control costs as the company grows should help produce 20% to 23% earnings growth. She reckons the stock could climb to $41 in the next 12 to 18 months, for a 29% return.

--Duff McDonald