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The Influence of Founder Status on Firm Performance: Empirical Evidence from Canadian IPO Firms

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  • Saif Ullah
  • Dan Zhang

Abstract

This study compares performance for founder-managed firms and professional-managed firms by analyzing 138 Canadian IPO firms that went public from 2004 to 2013. In this paper, we measure firm performance in two ways- Tobin¡¯s Q and ROA are used to measure a firm¡¯s financial performance, while firm survival status is used as a supplementary performance measure. We find that founder-managed firms underperform and underlive their counterparts when firm performance is measured by Tobin¡¯s Q and survival status. Founder status is proved to be unrelated to ROA. The negative influence of founder status can be explained by the relevant transaction hypothesis, which states that founder-managers may act for the controlling family and are more concerned with the associated private income stream than with maximizing the value of the firm.

Suggested Citation

  • Saif Ullah & Dan Zhang, 2016. "The Influence of Founder Status on Firm Performance: Empirical Evidence from Canadian IPO Firms," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(11), pages 134-134, November.
    • Handle: RePEc:ibn:ijefaa:v:8:y:2016:i:11:p:134
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    References listed on IDEAS

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    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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