The Family Behind the Family Firm: Evidence from Successions in Danish Firms

40 Pages Posted: 31 Oct 2008

See all articles by Morten Bennedsen

Morten Bennedsen

INSEAD - Economics and Political Sciences; University of Copenhagen - Department of Economics

Kasper Meisner Nielsen

Copenhagen Business School - Department of Finance

Daniel Wolfenzon

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Date Written: February 2005

Abstract

This paper uses a unique dataset from Denmark to examine the impact of owners family characteristics (size, gender composition, divorce, etc) on the decision to appoint internal (family) or external chief executive officers (CEOs). In contrast to common perceptions, we find that conditional on observing family CEO transitions, within cohort (spouse, siblings) successions are at least as prevalent as subsequent generation transitions. When assessing the impact of family characteristics on subsequent generation CEO appointments, we find that the probability of observing a family succession increases with the number of children, decreases with the ratio of female children, and decreases with divorce, particularly when it is accompanied with a new marriage and a new family. To show that these results are not spurious, we use instrumental variables. Overall, we find that family dynamics play a significant role in firm decision-making even when families are not the sole owner of these firms.

Suggested Citation

Bennedsen, Morten and Nielsen, Kasper Meisner and Wolfenzon, Daniel, The Family Behind the Family Firm: Evidence from Successions in Danish Firms (February 2005). NYU Working Paper No. CLB-06-002, Available at SSRN: https://ssrn.com/abstract=1291025

Morten Bennedsen (Contact Author)

INSEAD - Economics and Political Sciences ( email )

Boulevard de Constance
F-77305 Fontainebleau Cedex
France

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5, Bygn 26
Copenhagen, 1353
Denmark

Kasper Meisner Nielsen

Copenhagen Business School - Department of Finance ( email )

A4.17 Solbjerg Plads 3
Copenhagen, Frederiksberg 2000
Denmark

Daniel Wolfenzon

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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