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Family Managers and Investment Decisions

Author

Listed:
  • González, Xulia
  • Lach, Saul
  • Miles, Daniel
  • Pazó Martínez, María Consuelo

Abstract

This paper examines how managerial type shapes firms’ investment decisions, focusing on the distinction between owner (family)-managed firms and professionally-managed firms. We estimate a flexible investment policy function which depends on productivity, capital, labor and on other firm-level state variables, and is allowed to vary systematically with managerial type. Since firm-level productivity is not directly observed, we estimate it in a first step, addressing both the endogeneity of input choices and the lack of information on physical quantities. Our analysis draws on a rich panel of Spanish manufacturing firms from 1993 to 2016 that identifies whether firm owners, or their relatives, hold managerial positions. We find that, after controlling for state variables, family-managed firms invest more on average than professionally-managed firms. Managerial type also matters for how investment responds to changes in its determinants. In particular, family-managed firms exhibit stronger investment responses to changes in productivity and capital and display more procyclical investment behavior.

Suggested Citation

  • González, Xulia & Lach, Saul & Miles, Daniel & Pazó Martínez, María Consuelo, 2026. "Family Managers and Investment Decisions," CEPR Discussion Papers 21383, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:21383
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    Keywords

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    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D25 - Microeconomics - - Production and Organizations - - - Intertemporal Firm Choice: Investment, Capacity, and Financing

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