Instituto Tecnológico Autónomo de México

About: Instituto Tecnológico Autónomo de México is a education organization based out in Mexico City, Mexico. It is known for research contribution in the topics: Politics & Population. The organization has 1098 authors who have published 2532 publications receiving 39083 citations. The organization is also known as: Instituto Tecnologico Autonomo de Mexico & Mexico Autonomous Institute of Technology.

Inside the Family Firm: The Role of Families in Succession Decisions and Performance

Abstract: This paper uses a unique dataset from Denmark to investigate the impact of family characteristics in corporate decision making and the consequences of these decisions on firm performance. We focus on the decision to appoint either a family or external chief executive officer (CEO). The paper uses variation in CEO succession decisions that result from the gender of a departing CEO's firstborn child. This is a plausible instrumental variable (IV), as male first-child firms are more likely to pass on control to a family CEO than are female first-child firms, but the gender of the first child is unlikely to affect firms' outcomes. We find that family successions have a large negative causal impact on firm performance: operating profitability on assets falls by at least four percentage points around CEO transitions. Our IV estimates are significantly larger than those obtained using ordinary least squares. Furthermore, we show that family CEO underperformance is particularly large in fast-growing industries, industries with highly skilled labor force and relatively large firms. Overall, our empirical results demonstrate that professional, non-family CEOs provide extremely valuable services to the organizations they head.

Do Ceos Matter

Abstract: Estimating the value of top managerial talent is a central topic of research that hasattracted widespread attention from academics and practitioners. Yet, studying the impact of managers on firm performance is difficult because of endogeneity and omitted variablesconcerns. We test for the impact of managers on firm performance in two ways. First, weexamine whether top management (chief executive officers and board members) deaths have an impact on firm performance, focusing on the manager and firm characteristics that are associated to large manager-death effects. To our knowledge, this is the first test that assesses the consequences of managerial deaths on firm operating performance, investment rates and salesgrowth. Second, to bolster the interpretation that these effects are driven by managers, we test whether the death of top management immediate family members (spouse, parents, children,etc) affect firm prospects. These events provide us with exogenous variation in the attention managers pay to their business and thus allow us to measure the impact of managerial contribution to firm prospects. Our main findings are three. First, CEO deaths are strongly correlated with declines in firm operating profitability, asset growth and sales growth. Second,the death of board members does not seem to affect firm prospects, indicating that not all seniormanagers are equally important for firms outcomes. Third, CEOs immediate family deaths are significantly negatively correlated to firm performance. This last result establishes a strong link between the personal and business roles that top management play. Overall, our findingsdemonstrate CEOs are extremely important for firms prospects.