We investigate whether labor market regulation affects the performance difference between family and non-family firms across a large panel of more than 6,900 firms in 28 countries over 10 years. We establish two main results: family firms have a performance advantage over non-family firms in countries with less regulated labor markets, and the performance advantage of being family-controlled in countries with lower regulation is less pronounced in industries with high labor intensity and high labor volatility. These results are robust to matching and using a survey-based instrument for family control. Our results suggest that family control and labor market regulation to some extent are substitute governance mechanisms.
Family firms, Labor market regulation
Bennedsen, Morten; HUANG, Sterling Zhenrui; Wagner, Hannes F.; and Zueme, Stefan.
Family Firms and Labor Market Regulation. (2014). Research Collection School Of Accountancy (SMU Access Only).
Available at: http://ink.library.smu.edu.sg/soa_research_smu/29