Date of this Version
Journal of Financial Economics
Using proxy data on all Fortune-500 firms during 1994–2000, we find that family ownership creates value only when the founder serves as CEO of the family firm or as Chairman with a hired CEO. Dual share classes, pyramids, and voting agreements reduce the founder's premium. When descendants serve as CEOs, firm value is destroyed. Our findings suggest that the classic owner-manager conflict in nonfamily firms is more costly than the conflict between family and nonfamily shareholders in founder-CEO firms. However, the conflict between family and nonfamily shareholders in descendant-CEO firms is more costly than the owner-manager conflict in nonfamily firms.
© 2006. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
family firms, ownership, control, management, value
Villalonga, B., & Amit, R. (2006). How Do Family Ownership, Control and Management Affect Firm Value?. Journal of Financial Economics, 80 (2), 385-417. http://dx.doi.org/10.1016/j.jfineco.2004.12.005
Date Posted: 27 November 2017
This document has been peer reviewed.