TY  - JOUR
AU  - Mueller,Holger M.
AU  - Philippon,Thomas
TI  - Family Firms, Paternalism, and Labor Relations
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12739
PY  - 2006
Y2  - December 2006
UR  - http://www.nber.org/papers/w12739
L1  - http://www.nber.org/papers/w12739.pdf
N1  - Author contact info:
Holger Mueller
Stern School of Business
New York University
44 West Fourth Street
Suite 9-190
New York, NY 10012-1126
Tel: 212/998-0341
Fax: 212/995-4233
E-Mail: hmueller@stern.nyu.edu

Thomas Philippon
New York University
Stern School of Business
44 West 4th Street, Suite 9-190
New York, NY  10012-1126
Tel: 212/998-0490
Fax: 212/995-4233
E-Mail: tphilipp@stern.nyu.edu
M3  - presented at "SI 2006 Corporate Finance Workshop", August 1-2, 2006
AB  - Using firm-, industry-, and country-level data, we document a link between family ownership and labor relations. Across countries, we find that family ownership is relatively more prevalent in countries in which labor relations are difficult, consistent with firm-level evidence suggesting that family firms are particularly effective at coping with difficult labor relations. Our cross-country results are robust to controlling for minority shareholder protection and various other potential determinants of family ownership. Our results also hold if we use strike data from the 1960s to predict cross-country variation in family ownership thirty years later. We address causality in two ways. First, we instrument our measure of the quality of labor relations using 'Labor Origin', a variable describing the extent to which the emerging European liberal states in the 18th and 19th centuries confronted guilds and labor organizations. Second, making use of within-country variation at the industry level, we show that - controlling for industry and country fixed effects - industries that are more labor dependent have relatively more family ownership in countries with worse labor relations.
ER  -