The Review of Corporate Finance Studies Vol. 8 No. 2 2019

Family Firms and Labor Market Regulation

Morten Bennedsen¹; Sterling Huang²; Hannes F. Wagner³; Stefan Zeume⁴

¹ University of Copenhagen and INSEAD · ² Singapore Management University · ³ Bocconi University, IGIER, and ECGI · ⁴ University of Illinois at Urbana–Champaign

Abstract

In a panel across twenty-eight countries over 10 years, we show that family firms on average enjoy performance advantages over nonfamily firms only when labor markets are less regulated. We confirm this result in a matched firm sample using a survey-based instrument as a family control. Furthermore, family firms exhibit lower variation in employment levels in less-regulated labor markets, supporting the notion that labor relations drive family firms’ performance advantages. Our results are consistent with the notion that both family ownership and labor market reforms provide employment protection and thus partly substitute as governance mechanisms. Received December 17, 2018; editorial decision April 3, 2019 by Editor Andrew Ellul.

DOI

10.1093/rcfs/cfz005

Volume

8

Issue

2

Pages

348-379

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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