Abstract

https://ssrn.com/abstract=2482003
 


 



Family Firms, Employee Satisfaction, and Corporate Performance


Minjie Huang


University of Louisville - Department of Finance

Pingshu Li


University of Kansas - School of Business

Felix Meschke


University of Kansas - Finance Area

James P. Guthrie


University of Kansas - School of Business

July 15, 2015

Journal of Corporate Finance 34 (2015) 108-127

Abstract:     
Prior research shows that family control affects firm value through capital investment, debt financing, M&A activities, and governance structure. This study investigates the role of corporate culture in family firms and its implications for firm value. We use more than 100,000 surveys collected by Glassdoor between 2008 and 2012 that capture how employees perceive their company’s culture. We find that employees who work for firms with active founders rate their companies higher than employees in nonfamily firms, especially if the founder runs the company. In contrast, employee satisfaction in scion firms does not differ from nonfamily firms, and when scions run the company, employees are less satisfied. Scion firms also exhibit significant lower employee satisfaction during the recent financial crisis. Furthermore, employee assessments predict subsequent firm performance measured by Tobin's q and return on assets (ROA). Our findings provide evidence that family firms exhibit a human-capital-enhancing culture that improves firm performance.

Number of Pages in PDF File: 52

Keywords: Family firms, Corporate culture, Employee satisfaction, Human capital, Firm performance

JEL Classification: G3, G32, J28, M14


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Date posted: August 18, 2014 ; Last revised: August 31, 2015

Suggested Citation

Huang, Minjie and Li, Pingshu and Meschke, Felix and Guthrie, James P., Family Firms, Employee Satisfaction, and Corporate Performance (July 15, 2015). Journal of Corporate Finance 34 (2015) 108-127. Available at SSRN: https://ssrn.com/abstract=2482003

Contact Information

Minjie Huang
University of Louisville - Department of Finance ( email )
College of Business
Harry Frazier Hall
Louisville, KY 40292
United States
Pingshu Li
University of Kansas - School of Business ( email )
1300 Sunnyside Avenue
Lawrence, KS 66045
United States
Felix Meschke (Contact Author)
University of Kansas - Finance Area ( email )
Capitol Federal Hall
1654 Naismith Drive
Lawrence, KS 66045
United States
(347) 433-5495 (Phone)
HOME PAGE: http://www.business.ku.edu/faculty/meschke-felix/
James P. Guthrie
University of Kansas - School of Business ( email )
1300 Sunnyside Avenue
Lawrence, KS 66045
United States
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