Family Business and Firm Value: Evidence from Stakeholder Relations with Employees

Distinguished Professor of Finance, Nanyang Business School, Nanyang Technological University

Prof. Jun-Koo Kang's CV

We examine stakeholder relations with employees as an important channel through which family firms create value. Using employee relations ratings as the measure of employee-friendly policies, we find that compared with nonfamily firms, family firms treat their employees better and this better treatment is associated with higher firm value. The positive relation between employee treatment and firm value for family firms is robust to controlling for endogeneity bias, and also to using firms’ inclusion in Fortune’s “100 Best Companies to Work For” list to identify employee-friendly treatment. These findings suggest that employee-friendly policies help family firms create value.