Family firms and labor market regulation

• Main Authors: BENNEDSEN, Morten, HUANG, Sterling, WAGNER, Hannes F., ZUEME, Stefan
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2014
• Subjects: Family firms; Labor market regulation; Accounting
• Online Access: https://ink.library.smu.edu.sg/soa_research/1742; https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=2769&context=soa_research
• Institution: Singapore Management University

We investigate whether labor market regulation affects the performance difference between family and non-family firms across a large panel of more than 6,900 firms in 28 countries over 10 years. We establish two main results: family firms have a performance advantage over non-family firms in countries with less regulated labor markets, and the performance advantage of being family-controlled in countries with lower regulation is less pronounced in industries with high labor intensity and high labor volatility. These results are robust to matching and using a survey-based instrument for family control. Our results suggest that family control and labor market regulation to some extent are substitute governance mechanisms.