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Mixing family with business: A study of Thai business groups and the families behind them

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Listed:
  • Bertrand, Marianne
  • Johnson, Simon
  • Samphantharak, Krislert
  • Schoar, Antoinette

Abstract

How does the structure of the families behind business groups affect the group's organization, governance, and performance? We construct a unique dataset of family trees and business groups for 93 of the largest business families in Thailand. We find a strong positive association between family size and family involvement in the ownership and control of the family businesses. The founders' sons play a central role in both ownership and board membership, especially when the founder of the group is dead. Greater involvement by sons is also associated with lower firm-level performance, especially when the founder is dead. One hypothesis that emerges from our analysis is that part of the decay of family-run groups over time is due to the dilution of ownership and control across a set of equally powerful descendants of the founder, which creates a "race to the bottom" in tunneling resources out of the group firms.

Suggested Citation

  • Bertrand, Marianne & Johnson, Simon & Samphantharak, Krislert & Schoar, Antoinette, 2008. "Mixing family with business: A study of Thai business groups and the families behind them," Journal of Financial Economics, Elsevier, vol. 88(3), pages 466-498, June.
  • Handle: RePEc:eee:jfinec:v:88:y:2008:i:3:p:466-498
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    References listed on IDEAS

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    1. Stijn Claessens & Simeon Djankov & Joseph P. H. Fan & Larry H. P. Lang, 2002. "Disentangling the Incentive and Entrenchment Effects of Large Shareholdings," Journal of Finance, American Finance Association, vol. 57(6), pages 2741-2771, December.
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    More about this item

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • Z19 - Other Special Topics - - Cultural Economics - - - Other

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