TY - JOUR
T1 - A family member or professional management? the choice of a CEO and its impact on performance
AU - Lin, Shu Hui
AU - Hu, Shing Yang
PY - 2007/11
Y1 - 2007/11
N2 - In this study, we explore what kinds of family firms are more likely to have a family CEO or professional CEO, and investigate the performance of CEOs from different backgrounds. The results show that firms with low requirements in managerial skills and a high potential for expropriation are more likely to choose a CEO from the controlling family (nepotism). Our investigation, furthermore, shows that when a firm requires high managerial skills, using a professional CEO can help firm performance, especially if the family has low cash-flow rights and weak control. When there is large opportunity for expropriation in a family firm, the firm's performance will be better if the CEO is a family member and the family has highly persuasive cash-flow rights.
AB - In this study, we explore what kinds of family firms are more likely to have a family CEO or professional CEO, and investigate the performance of CEOs from different backgrounds. The results show that firms with low requirements in managerial skills and a high potential for expropriation are more likely to choose a CEO from the controlling family (nepotism). Our investigation, furthermore, shows that when a firm requires high managerial skills, using a professional CEO can help firm performance, especially if the family has low cash-flow rights and weak control. When there is large opportunity for expropriation in a family firm, the firm's performance will be better if the CEO is a family member and the family has highly persuasive cash-flow rights.
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U2 - 10.1111/j.1467-8683.2007.00650.x
DO - 10.1111/j.1467-8683.2007.00650.x
M3 - Article
AN - SCOPUS:37149023542
VL - 15
SP - 1348
EP - 1362
JO - Corporate Governance: An International Review
JF - Corporate Governance: An International Review
SN - 0964-8410
IS - 6
ER -