Do Family Owners Hold Nonfamily CEOs More Accountable Than Family CEOs for Firm Performance? A Dynamic Perspective

Abstract

This study investigates whether family owners consider the stages of CEO tenure in their use of firm performance to assess CEOs. Integrating insights on family owners’ long-term orientation and stages of CEO tenure, we theorize that family owners rely more on firm performance to make CEO replacement decisions during the mid-stage of CEO tenure than during the early and late stages. Moreover, we predict that they hold nonfamily CEOs more accountable for firm performance than family CEOs only during the mid-stage of CEO tenure. Using data from family-controlled firms in Taiwan, we found empirical evidence supportive of our theoretical predictions.