When does the family govern the family firm?

When does the family govern the family firm?

Øyvind Bøhren, Bogdan Stacescu, Line Almli, Kathrine Sondergaard

Series number :

Serial Number: 
555/2018

Date posted :

March 05 2018

Last revised :

February 20 2018
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Keywords

  • Corporate governance • 
  • family firms • 
  • private benefits • 
  • Endogeneity • 
  • self-selection

We find that the controlling family holds both the CEO and chair positions in 79% of Norwegian family firms. The family holds more governance positions when it owns large stakes in small, profitable, low-risk firms. This result suggests that the family trades off expected costs and benefits by conditioning participation intensity on observable firm characteristics.

We find that the positive effect of performance on participation is about twice as strong as the positive effect of participation on performance. The endogeneity of participation should therefore be carefully accounted for when analyzing the effect of family governance on the family firm’s behavior.

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Authors

Real name:
Line Almli
Real name:
Kathrine Sondergaard
Real name:
Bogdan Stacescu