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Mixing family with business: A study of Thai business groups and the families behind them

Marianne Bertrand, Simon Johnson, Krislert Samphantharak and Antoinette Schoar ()

Journal of Financial Economics, 2008, vol. 88, issue 3, 466-498

Abstract: How does the structure of the families behind business groups affect the group's organization, governance, and performance? We construct a unique dataset of family trees and business groups for 93 of the largest business families in Thailand. We find a strong positive association between family size and family involvement in the ownership and control of the family businesses. The founders' sons play a central role in both ownership and board membership, especially when the founder of the group is dead. Greater involvement by sons is also associated with lower firm-level performance, especially when the founder is dead. One hypothesis that emerges from our analysis is that part of the decay of family-run groups over time is due to the dilution of ownership and control across a set of equally powerful descendants of the founder, which creates a "race to the bottom" in tunneling resources out of the group firms.

Date: 2008
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