Family Ownership

1
Family Ownership

• Empirics Bertrand, Johnson, Samphantharak
  Schoar 2005 WP
• Theory see Burkart, Panunzi, and Shleifer JFE
  2003

2
Existing empirical results
3
Bertrand, Johnson, Samphantharak Schoar,
Mixing Family With Business

• Working Paper, 2005

4
Intro comments

• First look at intra-family dynamics
• Manifestation in ownership and control of family
  assets
• Consequences for firm performance
• Still a work in progress
• Empirics
• Difficulty in constructing maps of complex
  ownership structures
• Results need strengthening
• Incomplete data on births and deaths
• Theory and motivation
• Tradeoffs in inheritance decisions, see Burkart
  et al. 2003 below
• Cultural aspects, Brad DeLong new book chapter on
  inheritance rules
• Benefits and costs of family ownership

5
Motivation and Contributions

• Existing
• Unique data
• First vs. greater generation owners
• Public and Private firms
• Asian crisis natural experiment
• Ingenious variables and tests
• Endogeneity problem not severe
• Potential
• Crystallize the evidence on whether family
  ownership is a substitute for poor institutions
  (different incentives in good and bad times)

6
Anecdotes from Economist 2006

• Samsung largest, 20 of Koreas exports
• In Fall 2005 Patriarch Lee Kun-hee fled to US
  over illegal political donations
• Came back, publicly apologized, donated 830m
  to society
• Controversial transfer of control of the family
  holding company to his children
• HyundaiKia 75 of cars in Korea
• Patriarch Chung Ju-yung, three sons, family feud
  started in 2000
• One brother Chung Mong-koo controls H. Auto
  Slush finds to bribe government officials
• Similar deal to transfer control to son Chung
  Eui-sun
• Also apologized and announced donation to
  society
• Second brother Mong-jun, heavy industry arm
• Third brother Mong-hun, marine and tourism arm,
  suicide over passing money to North Korea

7
Business group data Table 1
8
Family data Table 2
9
Family involvement in business 1996 excerpt of
Table 3
10
Family involvement in ownership 1996 Table 4
Panel A
11
Family involvement in boards 1996 Table 4 Panel B
12
Firm Performance 1996 Table 5 Panel A
13
Firm Performance, private vs. public, 1996 Table
5 Panel B
14
Firm Performance, own. vs. control, 1996 Table 6
15
Firm Performance, own. vs. control, private vs.
public, 1996 Table 7
16
Excess control and family structure, 1996 Table 8
17
Family Size, Group Size and Group Structure, 1996
Table 9
18
Exit (by 2001) and Structure of Family Ownership
Table 10
19
Exit (by 2001) and Leverage (1996) Table 11
20
Firm Performance (2001) and Leverage (1996)
Table 12