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Family Succession and Firm Performance: Evidence from Italian Family Firms

Author

Listed:
  • Marco Cucculelli

    (Faculty of Economics �Giorgio Fu��, Marche Polytechnic University)

  • Giacinto Micucci

    (Bank of Italy, Ancona Branch, Economic Research Unit)

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.

Suggested Citation

  • Marco Cucculelli & Giacinto Micucci, 2008. "Family Succession and Firm Performance: Evidence from Italian Family Firms," Temi di discussione (Economic working papers) 680, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:wptemi:td_680_08
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    References listed on IDEAS

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    More about this item

    Keywords

    Family successions; Family firms; Founder-run firms;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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