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Family Succession and Firm Performance: Evidence from Italian Family Firms

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Author Info
Marco Cucculelli () (Faculty of Economics ‘Giorgio Fuà ’, Marche Polytechnic University)
Giacinto Micucci () (Bank of Italy, Ancona Branch, Economic Research Unit)

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Abstract

This article contributes to the growing empirical literature on family firms by studying the impact of the founder–chief executive officer (CEO) succession in a sample of Italian firms. We contrast firms that continue to be managed within the family by the heirs to the founders with firms in which the management is passed on to outsiders. Family successions, that is, successions by the founder’s heirs, are further analyzed by assessing the impact of the sectoral intensity of competition on the post-succession performance. This analysis also addresses the endogeneity in the timing of the CEO succession by controlling for a pure mean-reversion effect in the firm’s performance. We find that the maintenance of management within the family has a negative impact on the firm’s performance, and this effect is largely borne by the good performers, especially in the more competitive sectors. These results indicate that there is no inherent superiority of the family-firm structure and emphasize the importance of conducting an analysis of governance in a variety of institutional settings.

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File URL: http://www.bancaditalia.it/pubblicazioni/econo/temidi/td08/td680_08/en_td680/en_tema_680.pdf
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Paper provided by Bank of Italy, Economic Research Department in its series Temi di discussione (Economic working papers) with number 680.

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Date of creation: Jun 2008
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Handle: RePEc:bdi:wptemi:td_680_08

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Related research
Keywords: Family successions; Family firms; Founder-run firms;

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Find related papers by JEL classification:
G3 - Financial Economics - - Corporate Finance and Governance
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Alessio Ciarlone & Paolo Piselli & Giorgio Trebeschi, 2007. "Emerging Markets Spreads and Global Financial Conditions," Temi di discussione (Economic working papers) 637, Bank of Italy, Economic Research Department. [Downloadable!]
  2. Bernardo Bortolotti & Paolo Pinotti, 2008. "Delayed privatization," Temi di discussione (Economic working papers) 663, Bank of Italy, Economic Research Department. [Downloadable!]
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  3. Leonardo Gambacorta & Carlotta Rossi, 2007. "Modelling bank lending in the euro area: A non-linear approach," Temi di discussione (Economic working papers) 650, Bank of Italy, Economic Research Department. [Downloadable!]
  4. Silvia Magri, 2009. "The financing of small innovative firms: the italian case," Economics of Innovation and New Technology, Taylor and Francis Journals, vol. 18(2), pages 181-204. [Downloadable!] (restricted)
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  5. Claudia Biancotti & Giovanni D'Alessio, 2007. "Inequality and Happiness," Working Papers 75, ECINEQ, Society for the Study of Economic Inequality. [Downloadable!]
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  6. Andrea Brandolini, 2008. "On applying synthetic indices of multidimensional well-being: health and income inequalities in selected EU countries," Temi di discussione (Economic working papers) 668, Bank of Italy, Economic Research Department. [Downloadable!]
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  1. Riccardo De Bonis & Massimiliano Stacchini, 2009. "What determines the size of bank loans in industrialized countries? The role of government debt," Temi di discussione (Economic working papers) 707, Bank of Italy, Economic Research Department. [Downloadable!]
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