Founding family ownership and innovation

Vincent Y.S. Chen, Shou-Min Tsao and Guang-Zheng Chen

Asia-Pacific Journal of Accounting & Economics, 2013, vol. 20, issue 4, 429-456

Abstract: This study empirically examines the extent to which family ownership affects innovation. Using a sample of Taiwanese listed firms, we find that family firms invest more in innovation than nonfamily firms, suggesting that family firms' incentives to encourage innovation investment (e.g. long-run presence concern) outweigh families' risk diversification concern in making innovation decisions. Our results are more pronounced in families that have voting-cash flow rights divergence and that operate in high-tech industries. Our study suggests that the family ownership structure is not necessarily detrimental to shareholder interests, although prior research indicates that the agency cost of large and small shareholders is high in East Asian countries where family ownership can exacerbate this type of agency conflict.

Date: 2013
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Citations: View citations in EconPapers (9)

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DOI: 10.1080/16081625.2012.762971

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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