Dynastic control without ownership: Evidence from post-war Japan

Morten Bennedsen, Vikas Mehrotra and Yapana Wiwattanakantang have studied the performance of dynastic-controlled firms in post-war Japan.

Dynastic-controlled firms are firms led by founding-family CEOs while the family owns an insignificant share of equity (defined as less than 5%). They represent 7.4% of listed firms in post-war Japan, include well-known firms such as Casio, Suzuki, and Toyota, and are often grouped with widely held firms in the literature.

Bennedsen, Mehrotra and Wiwattanakantang  have found that these firms differ in key performance measures from both traditional family firms and non-family firms, and evolve from the former as equity-financed growth dilutes family ownership over time. In turn, the transition from dynastic control to non-family status is driven by a diminution of family legacy and talent.

Published in the Journal of Financial Economics in November 2021, you can read the paper here. It was written by:

Morten Bennedsen - INSEAD, University of Copenhagen

Vikas Mehrotra - University of Alberta

Jungwook Shim - Kyoto Sangyo University

Yapana Wiwattanakantang - National University of Singapore