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Managing the Family Firm: Evidence from CEOs at Work

  • Oriana Bandiera

    ()

    (London School of Economics (LSE))

  • Andrea Prat

    ()

    (Columbia University)

  • Raffaella Sadun

    ()

    (Harvard Business School, Strategy Unit)

We develop a new survey instrument to codify CEOs' diaries in large samples and use it to measure the labor supply of 1,114 family and professional CEOs of manufacturing firms across six countries (Brazil, France, Germany, India, the United Kingdom and the United States). By this measure, family CEOs work 9% fewer hours relative to professional CEOs, even when we control for a wide range of CEO, firm and industry characteristics. The differences in hours worked between family and professional CEOs are larger when the opportunity cost of leisure is lower. We interpret these results as evidence of differences in preferences for leisure across CEOs rather than optimal responses to organizational differences correlated with ownership. Differences in labor supply are larger in countries where inheritance laws favor wealth concentration and are correlated with differences in firm performance.

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Paper provided by Harvard Business School in its series Harvard Business School Working Papers with number 14-044.

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Length: 50 pages
Date of creation: Dec 2013
Date of revision: Dec 2014
Handle: RePEc:hbs:wpaper:14-044
Contact details of provider: Postal: Soldiers Field, Boston, Massachusetts 02163
Phone: 617.495.6000
Web page: http://www.hbs.edu/

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  1. Bertrand, Marianne & Mullainathan, Sendhil, 2003. "Enjoying the Quiet Life? Corporate Governance and Managerial Preferences," Scholarly Articles 3429713, Harvard University Department of Economics.
  2. Francesco Caselli & Nicola Gennaioli, 2003. "Dynastic Management," NBER Working Papers 9442, National Bureau of Economic Research, Inc.
  3. Chang-Tai Hsieh & Peter J. Klenow, 2007. "Misallocation and Manufacturing TFP in China and India," Discussion Papers 07-006, Stanford Institute for Economic Policy Research.
  4. Nicholas Bloom & Christos Genakos & Raffaella Sadun & John Van Reenen, 2012. "Management Practices Across Firms and Countries," NBER Working Papers 17850, National Bureau of Economic Research, Inc.
  5. Bloom, Nicholas & Eifert, Benn & Mahajan, Aprajit & McKenzie, David & Roberts, John, 2011. "Does management matter ? evidence from India," Policy Research Working Paper Series 5573, The World Bank.
  6. Oriana Bandiera & Luigi Guiso & Andrea Prat & Raffaella Sadun, 2010. "Matching Firms, Managers, and Incentives," Harvard Business School Working Papers 10-073, Harvard Business School, revised Aug 2011.
  7. ., 1994. "Firm, Theoru of the (I)," Chapters, in: The Elgar Companion to Institutional and Evolutionary Economics, chapter 44 Edward Elgar.
  8. John Geanakoplos & Paul R. Milgrom, 1988. "A Theory of Hierarchies Based on Limited Managerial Attention," Cowles Foundation Discussion Papers 775R, Cowles Foundation for Research in Economics, Yale University.
  9. Ulrike Malmendier & Geoffrey Tate, 2004. "CEO Overconfidence and Corporate Investment," NBER Working Papers 10807, National Bureau of Economic Research, Inc.
  10. Oriana Bandiera & Luigi Guiso & Andrea Prat & Raffaella Sadun, 2012. "What Do CEOs Do?," CEP Discussion Papers dp1145, Centre for Economic Performance, LSE.
  11. Nicola Gennaioli & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2011. "Human Capital and Regional Development," NBER Working Papers 17158, National Bureau of Economic Research, Inc.
  12. ., 1994. "Firm, Theoru of the (II)," Chapters, in: The Elgar Companion to Institutional and Evolutionary Economics, chapter 45 Edward Elgar.
  13. Philippe Aghion & Nicholas Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2002. "Competition and Innovation: An Inverted U Relationship," NBER Working Papers 9269, National Bureau of Economic Research, Inc.
  14. Mathias Dewatripont & Patrick Bolton, 1994. "The firm as a communication network," ULB Institutional Repository 2013/9595, ULB -- Universite Libre de Bruxelles.
  15. Villalonga, Belen & Amit, Raphael, 2006. "How do family ownership, control and management affect firm value?," Journal of Financial Economics, Elsevier, vol. 80(2), pages 385-417, May.
  16. Demsetz, Harold & Lehn, Kenneth, 1985. "The Structure of Corporate Ownership: Causes and Consequences," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1155-77, December.
  17. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2008. "Bootstrap-Based Improvements for Inference with Clustered Errors," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 414-427, August.
  18. Antoinette Schoar & Luo Zuo, 2011. "Shaped by Booms and Busts: How the Economy Impacts CEO Careers and Management Styles," NBER Working Papers 17590, National Bureau of Economic Research, Inc.
  19. Ulrike Malmendier & Geoffrey Tate, 2008. "Superstar CEOs," NBER Working Papers 14140, National Bureau of Economic Research, Inc.
  20. Marianne Bertrand & Simon Johnson & Krislert Samphantharak & Antoinette Schoar, 2008. "Mixing Family With Business: A Study of Thai Business Groups and the Families Behind Them," NBER Working Papers 13738, National Bureau of Economic Research, Inc.
  21. Nick Bloom & John Van Reenen, 2006. "Measuring and explaining management practices across firms and countries," LSE Research Online Documents on Economics 733, London School of Economics and Political Science, LSE Library.
  22. ., 1994. "Firm, Boundaries of the," Chapters, in: The Elgar Companion to Institutional and Evolutionary Economics, chapter 43 Edward Elgar.
  23. anonymous, 1994. "Research confirms rationality of analysts' forecasts," Economics Update, Federal Reserve Bank of Atlanta, issue Apr, pages 2.
  24. John R. Graham & Campbell R. Harvey & Manju Puri, 2011. "Capital Allocation and Delegation of Decision-Making Authority within Firms," NBER Working Papers 17370, National Bureau of Economic Research, Inc.
  25. William Mullins & Antoinette Schoar, 2013. "How do CEOs see their Role? Management Philosophy and Styles in Family and Non-Family Firms," NBER Working Papers 19395, National Bureau of Economic Research, Inc.
  26. Luis Garicano, 2000. "Hierarchies and the Organization of Knowledge in Production," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 874-904, October.
  27. Morten Bennedsen & Kasper Meisner Nielsen & Francisco Pérez-González & Daniel Wolfenzon, 2007. "Inside the Family Firm: the Role of Families in Succession Decisions and Performance," The Quarterly Journal of Economics, MIT Press, vol. 122(2), pages 647-691, 05.
  28. repec:eui:euiwps:eco2011/06 is not listed on IDEAS
  29. repec:hal:journl:hal-00173191 is not listed on IDEAS
  30. Francisco Pérez-González, 2006. "Inherited Control and Firm Performance," American Economic Review, American Economic Association, vol. 96(5), pages 1559-1588, December.
  31. Roy RADNER & Timothy VAN ZANDT, 1992. "Information Processing in Firms and Returns to Scale," Annales d'Economie et de Statistique, ENSAE, issue 25-26, pages 265-298.
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