Firm Performance and Managerial Succession in Family Managed Firms

24 Pages Posted: 12 May 2009

See all articles by David Hillier

David Hillier

University of Strathclyde - Department of Accounting and Finance

Patrick McColgan

University of Strathclyde

Date Written: 2009-02

Abstract

This paper investigates whether the family status of a company's top officer affects managerial replacement decisions. We report evidence that family-managed companies are characterized by higher levels of board control and potentially weak internal governance systems. Family CEOs are less likely than non-family CEOs to depart their position following poor performance. Stock prices react favorably and operating performance improves when companies announce the departure of a family CEO. Overall, our evidence suggests that shareholders benefit when a powerful CEO leaves their position in the company.

Suggested Citation

Hillier, David and McColgan, Patrick, Firm Performance and Managerial Succession in Family Managed Firms (2009-02). Journal of Business Finance & Accounting, Vol. 36, Issue 3-4, pp. 461-484, April/May 2009. Available at SSRN: https://ssrn.com/abstract=1400379 or http://dx.doi.org/10.1111/j.1468-5957.2009.02138.x

David Hillier (Contact Author)

University of Strathclyde - Department of Accounting and Finance ( email )

Curran Building
100 Cathedral Street
Glasgow G4 0LN
United Kingdom
44 0141 330 4809 (Phone)
44 0141 330 4442 (Fax)

Patrick McColgan

University of Strathclyde ( email )

Curran Building
100 Cathedral Street
Glasgow, G4 0LN
United Kingdom
+44 1415483690 (Phone)

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