"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 founder of the firm 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 - 'How Do Family Ownership, Control and Management Affect Firm Value?' - suggests that family ownership of corporations performs better than non-family firms when the founder serves as the CEO of a family firm or as its chairman with a hired CEO. When a descendent serves as the CEO of a family-run company - even if the founder remains chairman - the firm's market value declines. "