FAMILY OWNERSHIP AND CONTROL IN LARGE FIRMS: THE GOOD, THE BAD, THE IRRELEVANT – AND WHY

Mike Peng () and Yi Jiang ()

No wp840, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: There is a major debate regarding the role of concentrated family ownership and control in large firms, with three positions suggesting that such concentration is (1) good, (2) bad, or (3) irrelevant for firm performance. This article reports two studies to shed further light on this debate. Study 1 uses 744 publicly listed large firms in eight Asian countries to test competing hypotheses on the impact of the combination of family ownership and control on firm performance. On a country-by-country basis, our findings support all three positions. On an aggregate, pooled sample basis, the results support the “irrelevant” position. Study 2, based on a sample of 688 firms from the same eight Asian countries, endeavors to answer why Study 1 obtains different results for different countries. We theorize and document that Study 1 findings may be systematically associated with the level of shareholder protection embodied in legal and regulatory institutions. Study 2 thus sketches the contours of a cross-country, institution-based theory of corporate governance. Overall, our two studies lead to a finer-grained and more cumulative understanding of the crucial debate on family ownership and control in large firms.

Keywords: corporate governance; family firm; ownership; Asia Pacific (search for similar items in EconPapers)
JEL-codes: M1 (search for similar items in EconPapers)
Pages: pages
Date: 2006-10-01
New Economics Papers: this item is included in nep-bec
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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