Abstract

http://ssrn.com/abstract=1086989
 
 

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Mixing Family with Business: A Study of Thai Business Groups and the Families Behind Them


Marianne Bertrand


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Simon Johnson


International Monetary Fund (IMF)

Krislert Samphantharak


University of California, San Diego - School of International Relations and Pacific Studies

Antoinette Schoar


Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

January 2008

NBER Working Paper No. w13738

Abstract:     
Families run a large fraction of business groups around the world. In this paper, we analyze how the structure of the families behind these business groups affects the groups' organization, governance and performance. To address this question, we constructed a unique data set of family trees and business groups for nearly 100 of the largest business families in Thailand. We find a strong positive association between family size and family involvement in the ownership and control of the family business. The sons of the founders play a central role in both ownership and board membership, especially when the founder of the group is gone. The availability of more sons is also associated with lower firm-level performance, especially when the founder is no longer present. We identify a possible governance channel for this performance effect. Excess control by sons, but not other family members, is associated with lower firm performance. In addition, excess control by sons increases with the number of sons and with the death of the founder. One hypothesis that emerges from our analysis is that part of the decay of family-run groups over time may be due to a dilution of ownership and control across a set of equally powerful descendants of the founder, which creates a race to the bottom in tunneling resources out of the group firms.

Number of Pages in PDF File: 49

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Date posted: January 24, 2008  

Suggested Citation

Bertrand, Marianne and Johnson, Simon and Samphantharak, Krislert and Schoar, Antoinette, Mixing Family with Business: A Study of Thai Business Groups and the Families Behind Them (January 2008). NBER Working Paper No. w13738. Available at SSRN: http://ssrn.com/abstract=1086989

Contact Information

Marianne Bertrand (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-834-5943 (Phone)
HOME PAGE: http://gsbwww.uchicago.edu/fac/marianne.bertrand/vita/cv_0604.pdf
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
617-588-0341 (Phone)
617-876-2742 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Simon Johnson
International Monetary Fund (IMF) ( email )
700 19th Street, N.W.
Washington, DC 20431
United States
Krislert Samphantharak
University of California, San Diego - School of International Relations and Pacific Studies ( email )
9500 Gilman Drive
La Jolla, CA 92093-0519
United States
858-534-0627 (Phone)
858-534-3939 (Fax)
Antoinette Schoar
Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )
50 Memorial Drive, E52-447
Cambridge, MA 02142
United States
617-253-3763 (Phone)
617-258-6855 (Fax)
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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