Labor topics nick bloom bossonomics economics of ceos and family firms
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LABOR TOPICS Nick Bloom “Bossonomics”: economics of CEOs and family firms. Family firms are extremely common, particularly in developing countries (1/2). Data from “Corporate ownership around the world” by La Porta, Lopez-de-Silanes and Shleifer, JF 1999.

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LABOR TOPICS Nick Bloom “Bossonomics”: economics of CEOs and family firms

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Labor topics nick bloom bossonomics economics of ceos and family firms

LABOR TOPICSNick Bloom“Bossonomics”: economics of CEOs and family firms


Family firms are extremely common particularly in developing countries 1 2

Family firms are extremely common, particularly in developing countries (1/2)

Data from “Corporate ownership around the world” by La Porta, Lopez-de-Silanes and Shleifer, JF 1999.

Looks at 20 largest publicly quoted firms in each country – figures for medium and smaller firms much more extreme


Family firms are extremely common particularly in developing countries 2 2

share family CEO (2nd+ generation)

share founderCEO (1st generation)

share government owned

Family firms are extremely common, particularly in developing countries (2/2)

Ownership shares from Bloom and Van Reenen (2010, JEP)


Primary reason seems to be the difficulty in separating ownership and control

Primary reason seems to be the difficulty in separating ownership and control

Legal protection for investors is often weak for shareholders in developing countries – i.e. Indian legal system

As a result families rarely sell out and use external management, as is common in the US (i.e. Wal-Mart)

This is a still very under researched topic simply because of a lack of data, so papers focus on Denmark and the US.


Inherited control and firm performance american economic review 2006 francisco perez gonalez

“Inherited control and firm performance”American Economic Review, 2006Francisco Perez-Gonalez


Reasonably well cited paper for it s age

Reasonably well cited paper for it’s age


Labor topics nick bloom bossonomics economics of ceos and family firms

Family-firm paper which uses clever identification (1/2)

  • Looks at the management transitions in US publicly quoted firms (1980-2001) with concentrated family holdings

  • Publicly quoted less likely to be family controlled, but still finds 335 transitions with (prior) family ownership

  • In basic statistics reports that:

    • A third (122) of transitions are to other family members

    • Family CEOs are 8 years younger on average


Labor topics nick bloom bossonomics economics of ceos and family firms

Family-firm paper which uses clever identification (2/2)

  • Looks at the transition and find that announcement that a firms founding CEO will step-down leads to:

    • Big stock rise if the next CEO is not a family-member

    • Big drop if the next CEO is a family member

      • Drop driven by those from “non-selective colleges” (defined as outside top 189 US Colleges)

  • Finds similar differences in accounting measures like Return on Assets

  • This was from Perez-Gonzalez PhD thesis but was not his main paper (a 2nd year paper I think)

    • So for empirical work worth pushing analysis as hard to tell where this will eventually end up!


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