Abstract

http://ssrn.com/abstract=1777548
 
 

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Adoptive Expectations: Rising Sons in Japanese Family Firms


Vikas Mehrotra


University of Alberta - Department of Finance and Statistical Analysis

Randall Morck


University of Alberta - Department of Finance and Statistical Analysis; National Bureau of Economic Research (NBER)

Jungwook Shim


Independent

Yupana Wiwattanakantang


National University of Singapore - Department of Finance/Strategy and Policy

February 28, 2011


Abstract:     
The practice of adopting adults, even if one has biological children, makes Japanese family firms unusually competitive. Our nearly population-wide panel of postwar listed non-financial firms shows inherited family firms more important in postwar Japan than generally realized, and also performing well – an unusual finding for a developed economy. Adopted heirs’ firms outperform blood heirs’ firms, and match or nearly match founder-run listed firms. Both adopted and blood heirs’ firms outperform non-family firms. Using family structure variables as instruments, we find adopted heirs “causing” elevated performance. These findings are consistent with adult adoptees displacing blood heirs in the left tail of the talent distribution, with the “adopted son” job motivating star managers, and with the threat of displacement inducing blood heirs to invest in human capital, mitigating the so-called “Carnegie conjecture” that inherited wealth deadens talent.

Number of Pages in PDF File: 42

Keywords: Adoption, Corporate Governance, Family Business, Inherited Ability, Japan, Succession

JEL Classification: G32, G34, M13, O53

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Date posted: March 7, 2011  

Suggested Citation

Mehrotra, Vikas and Morck, Randall and Shim, Jungwook and Wiwattanakantang, Yupana, Adoptive Expectations: Rising Sons in Japanese Family Firms (February 28, 2011). Available at SSRN: http://ssrn.com/abstract=1777548 or http://dx.doi.org/10.2139/ssrn.1777548

Contact Information

Vikas Mehrotra
University of Alberta - Department of Finance and Statistical Analysis ( email )
School of Business
University of Alberta
Edmonton, Alberta T6G 2R6
Canada
780-492-2976 (Phone)
780-492-3325 (Fax)

Randall K. Morck (Contact Author)
University of Alberta - Department of Finance and Statistical Analysis ( email )
2-32C Business Building
Edmonton, Alberta T6G 2R6
Canada
780-492-5683 (Phone)
780-492-3325 (Fax)

National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Jungwook Shim
Independent ( email )
No Address Available
United States
Yupana Wiwattanakantang
National University of Singapore - Department of Finance/Strategy and Policy ( email )
Business School
Mochtar Riady Building #7-44, 15 Kent Ridge Dri
Singapore, 117592
Singapore
65-6516-1912 (Phone)
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