earticle

영어

To better understand the nature of family-owned firms, one must distinguish management from control rights (Villalonga and Amit, 2006). Also not all controlling sh-areholders in family firms serve as CEOs. When professional managers serve as CEOs of family firms, the controlling shareholders often assume the role of monitoring the hired managers. Therefore, these firms end up bearing some agency costs that incur between the owner and professional managers. While the owner-manager conflict can be mitigated in firms in which family members serve as CEOs (henceforth, ‘family CEO’), the agency problem between controlling shareholders and minority shareholders can be also intensified (Shleifer and Vishny, 1997). Taken all factors into consideration, family CEOs can affect firm performance in both positive and negative ways. By definition, controlling shareholders of any business groups face the dilemma whether to get involved in the firm management. And yet, not much research has been conducted on this issue as to address the question which is better for the firm. This must have been so perhaps because of data limitations. In fact, Lin and Hu (2007) is the only study that directly addresses the selection issue. However, their sample is limited to listed Taiwanese firms, not sufficient to account for general characteristics of business groups including unlisted firms. To the best of my knowledge, this paper is the first study of its kind to analyze the determinants of family CEO using information of all affiliatesboth listed and unlisted- belonging to the same business groups. When a family keeps control of a firm, its controlling shareholders can get involved in the management as CEOs or the like to maximize the sum of the value of the retained block and the private benefits obtained (Burkart, Panunzi, and Shleifer, 2003). If maximizing the former is intended, family CEO can positively affect firm performance as long as he/she has good management skills. But if maximizing the latter is intended, family CEO can be negatively related to firm performance. Stein (1989) and James (1999) develop a model illustrating the positive effect of long-term investors on firms’ investment efficiency especially when they are the members of the family that owns the firm. The study explains that such long-term investors can minimize myopic investment decisions by managers. Anderson and Reeb (2003) empirically find that firms with family CEOs outperform those with professional CEOs for this reason. On the other hand, controlling shareholders of family firms don’t tend to take enough advantage of competitive managerial labor market since they are likely to limit management control to their own family circles. Such practice of ‘nepotism’ can harm firm performance (Perez-Gonzalez, 2006). As such, existing theoretical and empirical studies about the effect of family CEO on firm performance are contradictory. To draw its own conclusion, this paper first investigates the precise determinants of family CEO before probing the question of family CEO’s effect on firm performance. Finally to reflect the endogenous nature inherent in family CEOs, the self-selection or reverse causality issue is addressed through modeling family CEO as an endogenous choice. Using the Korean business group data from 2001 through 2011, the following results are found. First, firms with higher cash flow rights of controlling shareholders and larger equity portion in affiliates are more likely to have family CEOs. This means that controlling shareholders tend to serve as CEOs to maximize their control rights over the business group as well as the value of their stake, supporting a proposition of Burkart et al. (2003). Second, family CEO negatively affects firm profitability measured by EBITDA. This implies that when controlling shareholders serve as CEOs, agency costs between themselves and minority shareholders increase. Also, only for firms with non-family CEOs, their investments have a significantly positive impact on EBITDA, indicating that professional CEOs commit more to efficient investments than family CEOs do. Third, for firms with family CEOs, higher cash flow rights and larger equity portion in affiliates are associated with lower firm values measured by Tobin’s q. This implies that the concentration of ownership and management by controlling shareholders induces agency problems due to the entrenchment effect, making them commit to maximizing control rights over the business group although the value of their shares is damaged. On the other side, for non-family CEO, larger equity portion in affiliates is associated with higher firm value, implying that professional CEOs invest more efficiently in affiliates’ equity than family CEOs do. But the effect of cash flow rights on firm values is insignificant for these firms. Just like the results on EBITDA, investments have a significantly positive impact on firm values only for the sample with non-family CEO. Fourth, controlling the endogeneity of family CEO through Heckman (1979)’s model, family CEO still negatively affects value as well as profitability of firm. Fifth, through a robustness check we found that firm profitability worsens only when family CEO runs the firm; if professional managers are CEOs and family members are not involved in the management position, those firms show higher value. This finding suggests that securing an independent professional management system without family members can be the most effective way to maximize corporate value in the business group. Overall, the findings indicate that when controlling shareholders with potentially powerful influence over the business group directly manages the firm, they are highly like to be driven by the self-serving incentive to maximize their controlling rights over the business group, rather than to commit themselves to increasing firm value through efficient investments. By drawing this conclusion, this study sheds more light on this unexplored yet salient question of which organizational structure, with or without family CEOs, is more efficient.

한국어

본 논문은 지배주주가 가족인 한국의 대기업집단을 대상으로 어떤 계열사에 가족이 최고경영자(CEO)로서 재직하는지의 결정요인과 그러한 가족의 직접적인 경영권 행사가 기업의 성과 및 가치에 미치는 영향을 분석한다. 한국 대규모 기업집단의 방대한 자료를 활용하여 분석한 결과, 지배주주 가족의 소유권(cash flow rights)이 크고 그룹에 대한 출자비중이 높은 계열사일수록 가족이 CEO로서 재직할 가능성이 높게 나타난다. 하지만 지배주주 가족이 CEO인 경우 수익성(EBITDA)이 더 낮게 나타나 가족의 직접 경영은 오히려 기업성과에 악영향을 미친다. 또한 지배주주 가족이 CEO인 경우에만 가족의 소유권과 그룹에 대한 출자비중이 클수록 오히려 기업가치(Q 비율)가 낮게 나타난다. 이는 가족에 의한 소유와 경영의 일치가 오히려 지배주주로 하여금 그룹에 대한 통제권 유지에 몰입하게 하는 참호구축(entrenchment) 효과로 인해 대리인 문제가 발생 한다는 것을 암시한다. 마지막으로 지배주주 가족이 임원에 포함되지 않고 전문경영자가 CEO인 경우에 있어서만 기업가치가 높게 나타나 독립적인 전문경영인 체제가 기업가치 극대화를 위해서 가장 효과적인 수단임을 발견한다. 본 연구는 지배주주의 영향력이 막강한 기업집단에서 가족경영보다는 전문경영 체제가 보다 효율적임을 보여주었다는 데 그 의의가 있다.