Family Ownership and Returns on Investment – Founders, Heirs, and External Managers

Johan Eklund (), Johanna Palmberg and Daniel Wiberg

No 148, Ratio Working Papers from The Ratio Institute

Abstract: This paper investigates how family ownership, control, and management affect firms’ investment performance. We use the identity of Chief Executive Officer (CEO) and Chairman of the Board (COB) to establish under what management the firm is: founder, descendant, or external management. The results show that founder management has no effect on investment performance in family firms, whereas descendant management has a negative impact on returns on investment. Having an externally hired manager significantly improves investment performance. The results also indicate that the separation of voting right from cash flow right has a negative impact on investment performance in both family and non-family firms, but the negative effect is larger in family firms.

Keywords: Ownership; Control; Management; Family Firms; Returns on Investments (search for similar items in EconPapers)
JEL-codes: C23 G30 K22 L25 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2010-03-02
New Economics Papers: this item is included in nep-bec and nep-hrm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Family Ownership and Return on Investments - Founders, Heirs and External Managers (2011)
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