How do CEOs see their Role? Management Philosophy and Styles in Family and Non-Family Firms

Abstract

for valuable comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Managing the Family Firm: Evidence from CEOs at Work

“…Our findings complement the observation that family CEOs are less likely to adopt managerial best practices (Bloom and Van Reenen (2007), Lemos and Scur (2017)) and are characterized by a management style that is less conducive to shareholder value maximization (Mullins and Schoar (2013)). In line with these literatures, our time use analysis shows that the incentives arising from having a higher stake in the firm may be o↵set by other factors that induce less e↵ort on the part of the CEOs.…”

“…While it is important to notice that the founders managed firms in our sample are not start-ups (the average founder has been managing his firm for 22 years), the finding that founder and descendant CEOs behave similarly is in line with recent findings that both adopt worse managerial practices(Bloom and Van Reenen (2007)) and that they share a similar business philosophy and firm governance(Mullins and Schoar (2013)). 29 To see this, compare the coe cient on the family CEO dummy inTable 4, Column 1 with the one in Column 7.…”

CEO Behavior and Firm Performance

“…3 This is consistent with our model assumption that screening is imperfect, and that firms can end up hiring the wrong CEO. Our methodology is complementary to Mullins and Schoar (2013), who use self-reported survey questions to measure the management style and values of 800 CEOs in emerging economies. Their focus however di↵ers from ours, as they aim to explain variation in style and values rather than the link with performance.…”

CEO Behavior and Firm Performance

“…Finally, the paper is related to the literature that studies CEO traits such as skills and personality (Kaplan et al (2012), Kaplan and Sorensen (2016) Malmendier and Tate (2005) and Malmendier and Tate (2009)) or self-reported management styles Mullins and Schoar (2013). We di↵er from this literature in the object of measure (behavior vs. traits) and in terms of methodology: behavior can be measured using actual diary data, while typically the assessment of personality measures needs to rely on third party evaluations, self reports or indirect proxies for individual preferences.…”