Family Firm Performance and the First-Generation Change: Evidence from Latvia

Abstract

We examine succession and performance of family firms in Latvia. Latvia offers a natural setting to examine first-generation succession, because a majority of these firms were established shortly after the country gained independence in the early 1990s. Initial findings indicate that often the founding family does not have a majority at the outset. It takes 20 years for family ownership to exceed 75% and for firms with second-generation ownership to reach almost 10% of the sample. Notably, approximately 80% of the sample firms are still majority-owned and managed by their founders and report higher ROA than nonfamily firms do.

Keywords: family firms, succession planning, family ownership, Corporate governance, return on assets (ROA)