Ownership versus Management Effects on Performance in Family and Founder Companies: A Bayesian Analysis

Joern Block, Jaskiewicz Peter and Miller Danny

MPRA Paper from University Library of Munich, Germany

Abstract: There are ongoing debates in the literature concerning the performance of family firms: some studies find superior performance among these companies, others find negative or neutral per-formance effects. In this research we employ agency theory to argue that the effects of family ownership vs. family management will be quite different: the former is expected to contribute positively to performance, the latter is argued to erode performance. Previous studies, due to problems of omitted variables or multicollinearity have been unable to distinguish these effects. Using a Bayesian approach that avoids these problems, we find that whereas family and founder ownership are associated with superior performance, the results for family management and even founder management are far more ambiguous. Our results have implications regarding the own-ership and management of lone founder and family firms.

Keywords: Family firms; lone founder firms; performance; Bayesian analysis; agency theory (search for similar items in EconPapers)
JEL-codes: G3 L2 M13 (search for similar items in EconPapers)
Date: 2010-06-21
New Economics Papers: this item is included in nep-eff
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