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Family Business: Why Firms Do Well When Founders Are at the Helm
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******************************** Family Business: Why Firms Do Well When Founders Are at the Helm http://knowledge.wharton.upenn.edu/index.cfm?fa=viewfeature&id=1065 Despite the lack of independent directors on their boards and voting power for minority shareholders, family-run companies are still the better bet for all stakeholders as long as the firm's founder is involved as chief executive officer or chairman. If the descendent of a founder runs the company, value is lost. Those are some of the conclusions of a paper by Wharton Professor Raphael (Raffi) Amit and Harvard Business School Professor Belen Villalonga. The paper, titled "How Do Family Ownership, Control and Management Affect Firm Value?" also looks at corporate governance. Among its findings: While family companies often lack independent directors and give insiders more voting power, they still manage to score higher on corporate governance than non-family companies.
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