Family ownership and Labour investment efficiency: Evidence from Korea

Kyoungwon Mo, Kyung Yun (Kailey) Lee and Seun-Young Park

Applied Economics Letters, 2022, vol. 29, issue 12, 1073-1078

Abstract: This paper examines whether founding-family ownership affects firms’ labour investment efficiency. By analysing public Korean companies from 2001 to 2018, we found that family firms are more efficient than non-family firms in regard to labour investment. The results show that family firms can achieve greater efficiency in labour investment by avoiding over-firing issues, thereby reducing underinvestment in employment problems. Additionally, we found that family firms make more efficient labour-related decisions with greater external financing. Overall, the results suggest that family firms’ long-term perspective enables them to maintain optimal labour levels.

Date: 2022
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DOI: 10.1080/13504851.2021.1908511

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