Do Family Firms Invest More than Nonfamily Firms in Employee-Friendly Policies?

• 成果类型: Article
• 署名作者: Kang, Jun-Koo; Kim, Jungmin
• 署名单位: Nanyang Technological University; Hong Kong Polytechnic University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2018.3231
• 发表日期: 2020
• 页码: 1300-1324
• 关键词: family firm; founder; employee-friendly policy; concern score; life cycle; labor-intensive industry; Managerial myopia; Agency problem; endogeneity

摘要

We examine whether family firms invest more in employee relations than non-family firms. Using the variation in state-level changes in inheritance, gift, and estate taxes as an exogenous shock to family control, we find that family firms, particularly those in which a founder serves as chief executive officer or those in which a family member serves as a director on the board, treat their employees better than nonfamily firms. More importantly, family firms focus on investing in employee relations that help alleviate laborrelated conflicts and controversies, possibly to avoid a negative family reputation among stakeholders. Family firms' better treatment of their employees is also evident when we use a difference-in-difference test to exploit changes in family firm status due to (sudden) deaths of family members and firms' inclusion in Fortune's 100 Best Companies to Work For list to identify employee-friendly treatment. We further find that family firms in the early stage of their life cycle invest more in employee relations when they operate in labor-intensive industries in which the benefits from family owners' monitoring of employees are expected to be large. Moreover, we find that although nonfamily firms' investment in employee relations is impeded by several constraints, such as short-term investor pressure, managerial myopia, and managerial agency problems, family firms do not suffer from such constraints. These findings help explain why underinvestment in employee relations is prevalent in public firms despite potential long-termbenefits from such intangible investment.