Family influence and corporate performance
We examined a sample of 120 Norwegian, founding family controlled and non-founding family controlled firms, to address tw important research questions: (1) is founding family control associated with higher firm value, and (2) are there unique corporate governance conditions under which a founding family controlled firm can be more valuable? We find a positive association between founding family control and firm value for four alternative definitions of founding family control.We find that the association between founding family CEOs and firm value is stronger among younger firms, firms with s aller boards, and firms with a single class of shares. Founding family directors has a stronger impact on firm value in firms with larger boards. However, the impact of founding family directors is not affected by corporate governance conditi ns such as firm age, board independence, and number of share classes. We find that the relation between founding familyownership and firm value is greater among older firms, firms with larger boards, and particularly when these firms have ultiple classes of shares. Our results imply that founding family controlled firms are more valuable and governed differently than firms without such influence. Furthermore, our results also suggest that founding family CEOs can enhance f rm performance when family influence does not create shareholder entrenchment or when their cash flow rights aremore aligned with their control rights.
Publisert i Journal of International Financial Management & Accounting, 2001
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