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Family firms

Author

Listed:
  • Burkart, Mike
  • Panunzi, Fausto
  • Shleifer, Andrei

Abstract

We present a model of succession in a firm owned and managed by its founder. The founder decides between hiring a professional manager or leaving management to his heir, as well as on what fraction of the company to float on the stock exchange. We assume that a professional is a better manager than the heir, and describe how the founder's decision is shaped by the legal environment. This theory of separation of ownership from management includes the Anglo-Saxon and the Continental European patterns of corporate governance as special cases, and generates additional empirical predictions consistent with cross-country evidence.

Suggested Citation

  • Burkart, Mike & Panunzi, Fausto & Shleifer, Andrei, 2003. "Family firms," LSE Research Online Documents on Economics 69549, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:69549
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    File URL: http://eprints.lse.ac.uk/69549/
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    Other versions of this item:

    • Mike Burkart & Fausto Panunzi & Andrei Shleifer, 2003. "Family Firms," Journal of Finance, American Finance Association, vol. 58(5), pages 2167-2201, October.

    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    JEL classification:

    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance

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