Finance

Exit and Transitions in Family Firms in Post-War Japan

Vikas Mehrotra, University of Alberta, Canada

23rd Nov 2012  11:30 am - Room 214/215 Economics and Business Building

Abstract

The involvement of families in post-war corporate control has not been widely researched. In this study, we provide two novel contributions to the literature on family successions. First, we develop a new technique to measure the decay in fractional firm ownership. We call this the half-life of ownership, and find considerable variation in half-lives across firms. Specifically, we find that half-lives are shorter firms with for older CEOs, high growth, and less liquidity. Second, we describe various ways in which families may exit the firms that they found, either partially by retaining ownership but not control (e.g. hiring a professional manager) or by disposing off ownership but continuing to serve as CEO, or a full exit by selling out. We provide evidence on the cross-sectional determinants of such exit.

153918