Trust in Founders

Murali Jagannathan, Brett W. Myers and Xu Niu

Journal of Banking & Finance, 2025, vol. 178, issue C

Abstract: Do employees trust founders more than professional managers? We explore this question with employee actions that are indicative of their distrust in management. We document significant differences in unionization efforts, labor strikes, and unfair labor practice (ULP) complaints between founder-managed firms and professionally managed firms. We posit that these differences stem from the predictability of corporate culture in founder firms and the alignment of interests between founders and employees. Although we employ various methods to establish causation, drawing definitive conclusions regarding employee trust in management is challenging due to the vastly different characteristics of founder-led firms compared to professionally managed firms.

Keywords: Corporate culture; Founder; Family firm; Trust; Labor relations; Unionization (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:178:y:2025:i:c:s0378426625001347

DOI: 10.1016/j.jbankfin.2025.107514

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