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Founder CEOs, business groups and firm value: evidence from an emerging market

Woo Sung Kim (Division of Business Administration, College of Global Business, Silla University, Busan, Republic of Korea)
Halil Kiymaz (Crummer Graduate School of Business, Rollins College, Winter Park, Florida, USA)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 8 June 2021

Issue publication date: 16 May 2023




The impact of founder CEOs on firm value continues to be debated in the finance literature. While earlier studies suggest that founding family ownership and founding CEO structure create less value than public ownership, later studies provide contradicting evidence. This study examines how founder CEOs affect firm value in the business group context while controlling for firm-specific variables and various CEO characteristics.


The authors use a sample of publicly listed Indian firms from 2010 to 2015 with 997 firm-year data observations. While 306 of these are in business groups, the remaining 691 are in a nonbusiness group. The authors also divide the sample into various sector subgroups, including materials (170), industrials (198), consumer (422) and others (198). They use two different models, including the fixed effect model (FEM) and pooled generalized method of moments (GMM) model to run regressions.


The authors find that firms with founder CEOs have lower firm value than those with nonfounder CEOs. These results show the importance of the role of founder CEOs in the Indian business groups. The authors further find a positive relationship between founder CEO and business group interaction variable, showing that an increase in founder CEO (or business group) increases the significance effect of business group (founder CEO) on firm performance. After separating the sample business and nonbusiness groups, the relationship between founder CEOs and firm value in both groups remains negative. Using various firm-specific control variables, the authors find that highly leveraged and smaller firms experience lower Tobin's Q. In contrast, firms with more investment in research and development perform better. Among CEO characteristics, the authors find that firms with highly educated CEOs do not perform well, while firms with older CEOs do better. Finally, they find that CEO tenure and duality are associated with lower firm performance.


This study adds value by providing evidence on the founder CEOs and firm performance in business groups from a fast-developing emerging market.



Kim, W.S. and Kiymaz, H. (2023), "Founder CEOs, business groups and firm value: evidence from an emerging market", International Journal of Emerging Markets, Vol. 18 No. 5, pp. 1102-1123.



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