Family management: creating or destroying firm value?

Cristiano Costa, Fernando Galdi () and Fabio Motoki
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Fernando Galdi: Fucape Business School

Economics Bulletin, 2014, vol. 34, issue 4, 2292-2302

Abstract: This research explores whether management by family members creates or destroys firm value. We estimate the impact of family pervasiveness in top management (family members as executive officers or board members) on firm value as measured by Tobin's Q. Results indicate that family members acting as executive officers decreases firm value. More, this effect is exacerbated when the family relationships are farther away, i.e., second-degree vs. first-degree or in-law vs. same-kin relationships. We contribute to the literature in the Brazilian context, in which the influence of family management on firm value remains largely unexplored. We also propose a new way of measuring family management pervasiveness that takes into account the closeness of relationships, thus controlling for the costs and benefits of altruistic acts within the family.

Keywords: family management; firm value; relatives' distance (search for similar items in EconPapers)
JEL-codes: G3 L2 (search for similar items in EconPapers)
Date: 2014-11-05
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