Firm Performance and Managerial Succession in Family Managed Firms
This paper investigates whether the family status of a company's top officer affects managerial replacement decisions. We report evidence that family-managed companies are characterized by higher levels of board control and potentially weak internal governance systems. Family CEOs are less likely than non-family CEOs to depart their position following poor performance. Stock prices react favorably and operating performance improves when companies announce the departure of a family CEO. Overall, our evidence suggests that shareholders benefit when a powerful CEO leaves their position in the company. Copyright (c) 2009 The Authors Journal compilation (c) 2009 Blackwell Publishing Ltd.
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