| To study the evolution of family-controlled firms, I follow a sample of firms from the IPO to the end of 2011 or until the firm is delisted from the stock exchange. I use the longitudinal data to examine the influence of family characteristics on family control horizons, family firm evolution outcomes, and family firm performance. I find that greater founder involvement and extended family involvement at the IPO predict a longer family control horizon. Greater founder involvement and extended family involvement in year t predict a lower probability of family exit in year t+1 and year t+2. I find that family's excess voting rights and family descendant CEOs decrease firm value. In addition, family ownership decreases firm value but increases accounting performance. Further, I find that family firms with higher family ownership and multiple family members have less R&D expenditures but more capital expenditures. My findings suggest that families with greater involvement in the firm seek to maintain a longer control horizon. However, these families do not maintain an investment perspective that can increase long-term firm value. Instead, they seem to prefer safer investments and focus on accounting performance. The evolution of my sample firms suggests survivorship and selection issues in cross-sectional samples and demonstrates the importance of considering cohort effects and firms' evolution stages when we examine the influence of founders and families. |
