Multiple founders and firm value

Chen, En-Te, Gray, Stephen, & Nowland, John (2012) Multiple founders and firm value. Pacific-Basin Finance Journal, 20(3), pp. 398-415.

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Abstract

In this paper, we highlight the existence of multi-founder firms, which were founded by multiple individuals (with no family connections) who are still actively involved in the firm as directors and/or managers. These firms provide a unique setting to shed further light on the net valuation effects of founder involvement. In particular, multi-founder firms provide us with the opportunity to examine the benefits and costs to shareholders of multiple founders involved as directors, CEOs and managers in the same firm. Our analysis indicates that multi-founder firms are more valuable than all other types of firms, including single-founder firms and family firms, with the valuation premium positively related to the number of founders involved in the firm. Further analysis confirms that this valuation premium is linked to the direct involvement of the multiple founders as directors and CEOs. However, further founder involvement in vice president positions has a negative relationship with firm value.

Impact and interest:

1 citations in Scopus
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2 citations in Web of Science®

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ID Code: 53685
Item Type: Journal Article
Refereed: Yes
Keywords: CEO; Director; Firm value; Founder; Multiple founders; Multi-founder firms
DOI: 10.1016/j.pacfin.2011.12.001
ISSN: 0927-538X
Subjects: Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > BUSINESS AND MANAGEMENT (150300)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Economics & Finance
Copyright Owner: Copyright 2012 Elsevier
Copyright Statement: This is the author’s version of a work that was accepted for publication in Pacific-Basin Finance Journal. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Pacific-Basin Finance Journal, [VOL 20, ISSUE 3, (2012)] DOI: 10.1016/j.pacfin.2011.12.001
Deposited On: 19 Sep 2012 23:30
Last Modified: 22 Feb 2013 23:05

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