Are US founding families expropriators or stewards? Evidence from quasi-natural experiment

Edward R. Lawrence, Dung T. Nguyen and Arun Upadhyay

Journal of Corporate Finance, 2021, vol. 69, issue C

Abstract: We use board structure changes brought by the Sarbanes-Oxley Act (SOX; 2002) and subsequent listing standards as a natural experiment to investigate if founding families are expropriators or stewards of shareholder value. We hypothesize gain in a firm's value post-SOX if founding families are expropriators and a value loss if they are stewards. Using a difference-in-difference approach, we find that family firms that did not meet the requirements of SOX-related, board independence provisions before 2002, suffered significant value loss post-SOX. Our results favor the steward role for founding families.

Keywords: Family firms; Founder; Descendant; Sarbanes Oxley; Firm value (search for similar items in EconPapers)
JEL-codes: G30 G32 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:69:y:2021:i:c:s0929119921001085

DOI: 10.1016/j.jcorpfin.2021.101987

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