Discussant Comments on
Family Firms and Industry Characteristics
Authors: En-Te Chen and John Nowland
Discussant: Chia-Wei Huang
2010.12.11
Summary (1/2)
 Use the population of listed companies on the
Taiwan Stock Exchange over the period 19972007
 Aggregate the data at the industry level, which
provides us with 297 industry-year observations
over the sample period
 Family firm involvement across industries is not
random and is related to specific industry
conditions
Summary (2/2)
 Family firms are more involved in industries with
more fixed assets, consistent with the long-term
view of family owners
 Family firms are more involved in industries
where there is greater potential to consume
private benefits of control
 The relationship between family firm involvement
and relative performance is positive
Comment-1
“We find that family firms are more involved in
industries that require greater investment in fixed
assets, consistent with the long-term view of family
owners.” (on page 4)
Family Firms
Involvement
Industry
Characteristics
Xt  Xt-1
Comment-2
“We also find that family firms are more involved in
industries where there is greater potential to
consume private benefits of control.” (on page 4)
Is family firms’ private benefit larger than nonfamily firms’ private benefit ?
Comment-3
“…we find that family firms perform better in high
tax industries, where family firms pay less tax than
non-family firms...” (on page 21)
I do not find any evidence to support this argument!
Comment-4
“Ownership” is mentioned in Table 2 (Descriptive
Statistics), but it is not included in the regression
model
Comment-5
 Table 3
Number of Family
Firms
Comment-6
 Table 3
…
…
7618 < 7661
Comment-7
Industry characteristics are the “average” for all firms in the
industry
Relative firm characteristics are the “average” for family
firms divided by the “average” for non-family firms in the
same industry
To mitigate the effect of outliers in the data,
the better way is measured by the median
Thanks for your listening