Multi-family cofounders and firm value

Abstract

The paper shows that higher valuation of family firms occurs only for family firms founded by several non-related people (multi-family cofounding firms). The evidence suggests that having at least two unrelated cofounders involved in management reduces agency problems through mutual monitoring. Relative to single-family founding firms, multi-family cofounding firms are more likely to force out founders and less likely to allow descendants to take control after founders retire