Founding-family-controlled corporations: An agency-theoretic analysis of corporate ownership and its impact upon performance, operating efficiency and capital structure.

摘要

This research tests the hypothesis that family relationships reduce agency costs. It incorporates into the analysis the measurements of performance, efficiency and capital structure.; In general, two consistent pictures emerge. First, controlling for ownership level, founding family control (FFC) reduces agency costs. Second, the control firms with higher managerial ownership show evidence of increased agency costs relative to the more diffusely-owned control firms, suggesting managerial entrenchment. In other words, higher corporate performance is more a function of founding family control than higher managerial ownership.; Regarding overall performance, we find higher market-to-book equity ratios (ME/BE) for the sample FFC firms compared to the ownership control firms and lower ME/BE for the ownership control firms compared to the diffusely-owned control firms. FFC firms had more productive employees. This productivity translated into greater profitability. Furthermore, the ownership control firms consistently underperformed or were no different from the diffusely-owned control firms, indicating that higher levels of managerial ownership without founding family control leads to entrenchment.; FFC firms had lower levels of debt, suggesting an increased aversion to financial risk exposure. However, this is not matched by a similar aversion to systematic risk as measured by beta. FFC is associated with slightly higher betas in spite of their lower leverage, suggesting higher asset betas. There is also a slight positive relationship between beta and the level of ownership of the control firms, indicating that greater ownership control is preferred in riskier situations.; Our results lead us to believe that the identity of the owner-managers is more important than the level of their ownership. The positive relationship between managerial ownership and firm value, as predicted by Jensen and Meckling (1976) is incomplete because of the incentive to use ownership control as a means of perquisite consumption. We find that family relationships reduce agency costs.