Bach, Laurent and Serrano-Velarde, Nicolas (2009) The Power of Dynastic Commitment. Centre for Business Taxation WP 09/24.
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We study how, at times of CEO transitions, the identity of the CEO successor shapes labor contracts within family firms. We propose an alternate view of how family management might underperform relative to external management in family firms. The idea developed in this paper is that, in contrast to external professionals, CEOs promoted from within the family not only inherit control of the firm but also inherit a set of implicit contracts that affects their ability to restructure the firm. Consistent with our dynastic commitment hypothesis, we find that family-promoted CEOs are associated with lower turnover of the workforce, lower wage renegotiation, and greater loyalty for the incumbent workforce.
|Item Type:||Other Working Paper|
|Keywords:||Succession, Family Firms, Implicit Contracts|
|Centre:||Oxford University Centre for Business Taxation > CBT Working Papers|
|Date Deposited:||23 May 2012 15:26|
|Last Modified:||15 Oct 2015 02:18|
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