Family Firms and Labor Market Regulation | Zendy

Morten Bennedsen | Zendy; Sterling Huang | Zendy; Hannes F. Wagner | Zendy; Stefan Zeume | Zendy

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Family Firms and Labor Market Regulation

Author(s) -

Morten Bennedsen,

Sterling Huang,

Hannes F. Wagner,

Stefan Zeume

Publication year - 2019

Publication title -

the review of corporate finance studies

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 4.292

H-Index - 14

eISSN - 2046-9136

pISSN - 2046-9128

DOI - 10.1093/rcfs/cfz005

Subject(s) - corporate governance , sample (material) , market regulation , business , control (management) , labour economics , labor relations , demographic economics , economics , market economy , management , finance , chemistry , chromatography

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.

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