Abstract We investigate the relation between founding-family ownership and firm performance. We find that family ownership is both prevalent and substantial; families are present in one-third of the S&P 500 and account for 18 percent of outstanding equity. Contrary to our conjecture, we find family firms perform better than nonfamily firms. Additional analysis reveals that the relation between family holdings and firm performance is nonlinear and that when family members serve as CEO, performance is better than with outside CEOs. Overall, our results are inconsistent with the hypothesis that minority shareholders are adversely affected by family ownership, suggesting that family ownership is an effective organizational structure. Journal Information The Journal of Finance publishes leading research across all the major fields of financial research. It is the most widely cited academic journal on finance and one of the most widely cited journals in economics as well. Each issue of the journal reaches over 8,000 academics, finance professionals, libraries, government and financial institutions around the world. Published six times a year, the journal is the official publication of the American Finance Association, the premier academic organization devoted to the study and promotion of knowledge about financial economics. JSTOR provides a digital archive of the print version of The Journal of Finance. The electronic version of the The Journal of Finance is available at http://www.interscience.wiley.com/. Authorized users may be able to access the full text articles at this site. Publisher Information Wiley is a global provider of content and content-enabled workflow solutions in areas of scientific, technical, medical, and scholarly research; professional development; and education. Our core businesses produce scientific, technical, medical, and scholarly journals, reference works, books, database services, and advertising; professional books, subscription products, certification and training services and online applications; and education content and services including integrated online teaching and learning resources for undergraduate and graduate students and lifelong learners. Founded in 1807, John Wiley & Sons, Inc. has been a valued source of information and understanding for more than 200 years, helping people around the world meet their needs and fulfill their aspirations. Wiley has published the works of more than 450 Nobel laureates in all categories: Literature, Economics, Physiology or Medicine, Physics, Chemistry, and Peace. Wiley has partnerships with many of the world’s leading societies and publishes over 1,500 peer-reviewed journals and 1,500+ new books annually in print and online, as well as databases, major reference works and laboratory protocols in STMS subjects. With a growing open access offering, Wiley is committed to the widest possible dissemination of and access to the content we publish and supports all sustainable models of access. Our online platform, Wiley Online Library (wileyonlinelibrary.com) is one of the world’s most extensive multidisciplinary collections of online resources, covering life, health, social and physical sciences, and humanities. Rights & Usage This item is part of a JSTOR Collection. Monthly Plan
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Log in through your institution journal article The Yale Law Journal Vol. 124, No. 5 (MARCH 2015) , pp. 1554-1627 (74 pages) Published By: The Yale Law Journal Company, Inc. https://www.jstor.org/stable/43617160 Read and download Log in through your school or library Subscribe to JPASS Unlimited reading + 10 downloads Abstract This Article challenges a persistent and pervasive view in corporate law and corporate governance: that a firm's managers should favor long-term shareholders over short-term shareholders, and maximize long-term shareholders' returns rather than the short-term stock price. Underlying this view is a strongly held intuition that taking steps to increase long-term shareholder returns will generate a larger economic pie over time. I show, however, that this intuition is flawed. Long-term shareholders, like short-term shareholders, can benefit from managers' destroying value-even when the firm's only residual claimants are its shareholders. Indeed, managers serving long-term shareholders may well destroy more value than managers serving short-term shareholders. Favoring the interests of long-term shareholders could thus reduce, rather than increase, the value generated by a firm over time. Journal Information The Yale Law Journal publishes original scholarly work in all fields of law and legal study. The journal contains articles, essays, and book reviews written by professors and legal practitioners throughout the world, and slightly shorter notes and comments written by individual journal staff members. The journal is published monthly from October through June with the exception of February. Publisher Information For over a century, the Yale Law Journal has been at the forefront of legal scholarship, sparking conversation and encouraging reflection among scholars and students, as well as practicing lawyers and sitting judges and Justices. The Journal strives to shape discussion of the most important and relevant legal issues through a rigorous scholarship selection and editing process. Rights & Usage This item is part of a JSTOR Collection. |
Evidence suggests that the best way to maximize the long-run return to shareholders is to focus on:
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