TY - JOUR
T1 - Firm location quality, founding family firms, and management team expertise
AU - Chen, Tsung Kang
AU - Tseng, Yijie
AU - Hsieh, Yu Ting
N1 - Publisher Copyright:
© 2023 Board of Trustees of the University of Illinois
PY - 2023/4
Y1 - 2023/4
N2 - We investigate whether firm location quality affects the management team expertise by employing 15,433 Taiwanese companies from 2006 to 2018. We find that the remoteness of a firm's location positively relates to management team expertise, suggesting that the effect of managerial entrenchment (observable or hidden compensation) dominates that of the small human pool in rural firms, which thereby attract managers with greater expertise to join rural firms. In addition, the effect of firm location quality on management team expertise becomes weaker when the firm is controlled by the founding family (i.e. the firm's CEO is the founder or the founder's descendant), implying that non-family managers may view family firms as an unattractive option because of the limited potential to progress in the company. Finally, our results hold with the consideration of endogeneity issues.
AB - We investigate whether firm location quality affects the management team expertise by employing 15,433 Taiwanese companies from 2006 to 2018. We find that the remoteness of a firm's location positively relates to management team expertise, suggesting that the effect of managerial entrenchment (observable or hidden compensation) dominates that of the small human pool in rural firms, which thereby attract managers with greater expertise to join rural firms. In addition, the effect of firm location quality on management team expertise becomes weaker when the firm is controlled by the founding family (i.e. the firm's CEO is the founder or the founder's descendant), implying that non-family managers may view family firms as an unattractive option because of the limited potential to progress in the company. Finally, our results hold with the consideration of endogeneity issues.
KW - Firm location quality
KW - Founding family firms
KW - Geography characteristics
KW - Management team expertise
KW - Managerial entrenchment
UR - http://www.scopus.com/inward/record.url?scp=85149786867&partnerID=8YFLogxK
U2 - 10.1016/j.qref.2023.01.004
DO - 10.1016/j.qref.2023.01.004
M3 - Article
AN - SCOPUS:85149786867
SN - 1062-9769
VL - 88
SP - 177
EP - 189
JO - Quarterly Review of Economics and Finance
JF - Quarterly Review of Economics and Finance
ER -