WHY DO FAMILY FIRMS CONGREGATE IN CERTAIN INDUSTRIES?

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En-Te Chen ORCID logo, John Nowland ORCID logo

https://doi.org/10.22495/cocv8i1c3p2

Abstract

We propose that family firm involvement and performance across industries is not random and is related to specific industry conditions. Using the population of listed companies on the Taiwan Stock Exchange over the period 1997-2007 we find that family firms are more involved in industries with greater fixed assets and lower board independence. We document a positive relationship between family firm involvement and performance, which indicates a net advantage for family firm shareholders in industries where family firms congregate. However, we also find that family firm performance is negatively affected when family firms use more debt and maintain a higher control wedge than their industry counterparts.

Keywords: Family Firms, Industry, Ownership, Private Benefits

How to cite this paper: Chen, E.-T., & Nowland, J. (2010). Why do family firms congregate in certain industries? Corporate Ownership & Control, 8(1-3), 346-359. https://doi.org/10.22495/cocv8i1c3p2