Dynastic Control Without Ownership: Evidence from Post-War Japan

Dynastic-controlled firms are 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. 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.

This article by Morten Bennedsen, Vikas Mehrotra, Jungwook Shim, and Yupana Wiwattanakantang appeared in the November 2021 issue of the Journal of Financial Economics.

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