A family member or professional management? the choice of a CEO and its impact on performance
Journal
Corporate Governance: An International Review
Journal Volume
15
Journal Issue
6
Pages
1348
Date Issued
2007-01-01
Author(s)
Lin, Shu Hui
Abstract
In this study, we explore what kinds of family firms are more likely to have a family CEO or professional CEO, and investigate the performance of CEOs from different backgrounds. The results show that firms with low requirements in managerial skills and a high potential for expropriation are more likely to choose a CEO from the controlling family (nepotism). Our investigation, furthermore, shows that when a firm requires high managerial skills, using a professional CEO can help firm performance, especially if the family has low cash-flow rights and weak control. When there is large opportunity for expropriation in a family firm, the firm's performance will be better if the CEO is a family member and the family has highly persuasive cash-flow rights. © 2007 Blackwell Publishing Ltd.
Subjects
Family CEOs | Family firms | Firm characteristics | Performance | Professional CEOs
Type
journal article