Critical Finance Review > Vol 10 > Issue

Not a Coincidence: Sons-in-Law as Successors in Successful Japanese Family Firms

Georg D. Blind, University of St. Gallen, Switzerland, georg.blind@aoi.uzh.ch Stefania Lottanti von Mandach, The University of Zurich, Switzerland, stefania.lottanti@aoi.uzh.ch
 
Suggested Citation
Georg D. Blind and Stefania Lottanti von Mandach (2021), "Not a Coincidence: Sons-in-Law as Successors in Successful Japanese Family Firms", Critical Finance Review: Vol. 10: No. . http://dx.doi.org/10.1561/104.00000086

Forthcoming: 01 Oct 2021
© 2020 Georg D. Blind and Stefania Lottanti von Mandach
 
Subjects
 
Keywords
G3J12N25Z130
JapanFamily firmsOutperformanceAdoptionsArranged marriages
 

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In this article:
1. Introduction
2. Succession Events Revisited
3. Assessing the MMSW Incentive Mechanisms
4. Turning Arguments Around: What if More Successful Firms Are More Likely to Have In-Law Successors?
5. Making Sense of Contradictory Evidence: “The Fundamental Things Might Not Apply, As Time Goes By”
6. Summary and Conclusion
Appendix A
References

Abstract

Mehrotra et al. (2013) observe that family firms listed before 1971 in Japan and run by non-blood heirs outperform those run by blood heirs between 1962 and 2000. They claim that this is due to superior talent, evidenced in succession event studies. Because the authors do not share their data, we attempt replication and find qualitatively similar results. These depend critically on a dummy for predecessor talent, which MMSW base on successful entry into an elite university more than half a century earlier. When excluding this dummy, no significant differential remains. Our results are robust to changes in definition of succession, to adding businesses listed after 1970, and to including more recent data (2001-2015). An alternative explanation is that non-blood heirs are selected into and inherit superiorly performing businesses.

DOI:10.1561/104.00000086