Family ownership and Labour investment efficiency: Evidence from Korea

ABSTRACT

This paper examines whether founding-family ownership affects firms’ labour investment efficiency. By analysing public Korean companies from 2001 to 2018, we found that family firms are more efficient than non-family firms in regard to labour investment. The results show that family firms can achieve greater efficiency in labour investment by avoiding over-firing issues, thereby reducing underinvestment in employment problems. Additionally, we found that family firms make more efficient labour-related decisions with greater external financing. Overall, the results suggest that family firms’ long-term perspective enables them to maintain optimal labour levels.

KEYWORDS:

• Ownership structure
• family firms
• family ownership
• investment efficiency
• labour investment

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea [NRF-2019S1A5A8032207]. This work was supported by Hankuk University of Foreign Studies Research Fund.