How Does Family Management Affect Firm Performance : Evidence from Taiwanese Firms

Abstract

This study used the panel data of 465 Taiwanese listed companies by applying both accounting and market-value indicators to an examination of family management’s influence on firm performances. The empirical results show that family firms in Tai-wan have performed better than non-family firms. The combination of equity owner-ship and management right has helped family firms reduce agency cost and enhance firm value in the long run. As for family management, the empirical results suggest that if the founder serves as the chairman and CEO at the same time, it is most benefi-cial to the firm’s performance. When the position of CEO is passed to a hired manag-er, it may enhance firm performance in the short-run. On the other hand, when the po-sition is passed down to a descendant, it may be conducive to firm value in the long-run.