Family Firms and Contractual Institutions

This paper offers new evidence on the relationship between contractual institutions, family management, and aggregate performance. The study creates a new firm-level database on management and ownership structures spanning 134 regions in 11 Europea...

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Main Authors:	Iacovone, Leonardo, Maloney, William F., Tsivanidis, Nick
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2019
Subjects:	FIRM PERFORMANCE FAMILY OWNERSHIP
Online Access:	http://documents.worldbank.org/curated/en/139191554304091289/Family-Firms-and-Contractual-Institutions http://hdl.handle.net/10986/31532

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recordtype	oai_dc
spelling	okr-10986-315322022-09-17T12:16:37Z Family Firms and Contractual Institutions Iacovone, Leonardo Maloney, William F. Tsivanidis, Nick FIRM PERFORMANCE FAMILY OWNERSHIP This paper offers new evidence on the relationship between contractual institutions, family management, and aggregate performance. The study creates a new firm-level database on management and ownership structures spanning 134 regions in 11 European countries. To guide the empirical analysis, it develops a model of industry equilibrium in which heterogeneous firms decide between family and professional management when the latter are subject to contracting frictions. The paper tests the model's predictions using regional variation in trust within countries. Consistent with the model, the finding show that there is sorting of firms across management modes, in which smaller firms and those in regions with worse contracting environments are more likely to be family managed. These firms are on average 25 percent less productive than professionally managed firms, and moving from the country with the least reliable contracting environment to the most increases total factor productivity by 21.6 percent. Family management rather than ownership drives these results. 2019-04-11T20:18:23Z 2019-04-11T20:18:23Z 2019-04 Working Paper http://documents.worldbank.org/curated/en/139191554304091289/Family-Firms-and-Contractual-Institutions http://hdl.handle.net/10986/31532 English Policy Research Working Paper;No. 8803 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	FIRM PERFORMANCE FAMILY OWNERSHIP
spellingShingle	FIRM PERFORMANCE FAMILY OWNERSHIP Iacovone, Leonardo Maloney, William F. Tsivanidis, Nick Family Firms and Contractual Institutions
relation	Policy Research Working Paper;No. 8803
description	This paper offers new evidence on the relationship between contractual institutions, family management, and aggregate performance. The study creates a new firm-level database on management and ownership structures spanning 134 regions in 11 European countries. To guide the empirical analysis, it develops a model of industry equilibrium in which heterogeneous firms decide between family and professional management when the latter are subject to contracting frictions. The paper tests the model's predictions using regional variation in trust within countries. Consistent with the model, the finding show that there is sorting of firms across management modes, in which smaller firms and those in regions with worse contracting environments are more likely to be family managed. These firms are on average 25 percent less productive than professionally managed firms, and moving from the country with the least reliable contracting environment to the most increases total factor productivity by 21.6 percent. Family management rather than ownership drives these results.
format	Working Paper
author	Iacovone, Leonardo Maloney, William F. Tsivanidis, Nick
author_facet	Iacovone, Leonardo Maloney, William F. Tsivanidis, Nick
author_sort	Iacovone, Leonardo
title	Family Firms and Contractual Institutions
title_short	Family Firms and Contractual Institutions
title_full	Family Firms and Contractual Institutions
title_fullStr	Family Firms and Contractual Institutions
title_full_unstemmed	Family Firms and Contractual Institutions
title_sort	family firms and contractual institutions
publisher	World Bank, Washington, DC
publishDate	2019
url	http://documents.worldbank.org/curated/en/139191554304091289/Family-Firms-and-Contractual-Institutions http://hdl.handle.net/10986/31532
_version_	1764474539292491776

Family Firms and Contractual Institutions

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