How do Family Ownership, Control and Management Affect Firm Value?
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Family ownership, control, and management significantly impact firm value. Research indicates that family ownership, especially when the founder serves as the CEO or Chairman with a hired CEO, creates value. Additionally, family ownership and pure family ownership are positively associated with firm value and earnings quality, mitigating agency problems . However, when descendants serve as CEOs, firm value is diminished. The influence of family control mechanisms like dual share classes and pyramids can reduce the founder's premium, affecting firm value. Moreover, family control and business group affiliation have distinct effects on R&D investments, with standalone family-controlled firms investing more in R&D compared to those within a family-controlled business group.
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| Papers (5) | Insight |
|---|---|
Open access 01 Jan 2009 | Family ownership and pure family ownership positively impact firm value and earnings quality by mitigating agency problems, while high ownership-control disparity does not significantly affect firm value. |
Open access 01 Jan 2009 19 Citations | Family ownership and pure family ownership positively impact firm value and earnings quality, mitigating agency problems. High ownership-control disparity does not significantly affect firm value and earnings quality. |
Open access 01 Jan 2012 | Family ownership, control, and management influence firm value. Family ownership concentration and family shareholder managers positively impact R&D investment, while family control within a business group may reduce R&D investment. |
| Family ownership creates value when the founder is CEO or Chairman with a hired CEO. Control mechanisms reduce the founder's premium, while descendants as CEOs decrease firm value. | |
Open access•Journal Article | Family ownership, earnings management, and ethnic diversity do not significantly affect firm value. Profitability, however, positively impacts firm value according to the research findings. |
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