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Ownership versus Management Effects on Performance in Family and Founder Companies: A Bayesian Analysis

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  • Joern, Block
  • Peter, Jaskiewicz
  • Danny, Miller

Abstract

There are ongoing debates in the literature concerning the performance of family firms: some studies find superior performance among these companies, others find negative or neutral per-formance effects. In this research we employ agency theory to argue that the effects of family ownership vs. family management will be quite different: the former is expected to contribute positively to performance, the latter is argued to erode performance. Previous studies, due to problems of omitted variables or multicollinearity have been unable to distinguish these effects. Using a Bayesian approach that avoids these problems, we find that whereas family and founder ownership are associated with superior performance, the results for family management and even founder management are far more ambiguous. Our results have implications regarding the own-ership and management of lone founder and family firms.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 23526.

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Date of creation: 21 Jun 2010
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Handle: RePEc:pra:mprapa:23526

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Keywords: Family firms; lone founder firms; performance; Bayesian analysis; agency theory;

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  1. Fama, Eugene F & Jensen, Michael C, 1983. "Agency Problems and Residual Claims," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 26(2), pages 327-49, June.
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  15. Bronwyn H. HALL & Raffaele ORIANI, 2004. "Does the Market Value R&D Investment by European Firms? Evidence from a Panel of Manufacturing Firms in France," Economics Working Papers, European University Institute ECO2004/13, European University Institute.
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