Founding family controlled firms: Efficiency and value

We examine the efficiency and value of founding family controlled firms (FFCFs), firms whose CEOs are either the founder or a descendant of the founder. We find that FFCFs are more efficient and valuable than non-FFCFs that are similar with respect to industry, size, and managerial ownership. We als...

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Veröffentlicht in:Review of financial economics 1998, Vol.7 (1), p.1-19
Hauptverfasser: McConaughy, Daniel L., Walker, Michael C., Henderson, Glenn V., Mishra, Chandra S.
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container_end_page 19
container_issue 1
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container_title Review of financial economics
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creator McConaughy, Daniel L.
Walker, Michael C.
Henderson, Glenn V.
Mishra, Chandra S.
description We examine the efficiency and value of founding family controlled firms (FFCFs), firms whose CEOs are either the founder or a descendant of the founder. We find that FFCFs are more efficient and valuable than non-FFCFs that are similar with respect to industry, size, and managerial ownership. We also observe that descendant-controlled firms are more efficient than founder-controlled firms. Finally, we show that younger founder-controlled firms are more efficient than older ones. These results are robust after controlling for the age of the firm and a variety of investment opportunity measures. Our results are consistent with the notions that managerial ownership is endogenous to the firm and that family relationships improve monitoring while providing incentives that are associated with better firm performance.
doi_str_mv 10.1016/S1058-3300(99)80142-6
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subjects Chief executive officers
Costs
Efficiency
Family corporations
Family owned businesses
Family-owned business enterprises
Management
Multivariate analysis
Public companies
Statistical analysis
Stockholders
Studies
Success
title Founding family controlled firms: Efficiency and value
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