Mon Sep 23 17:40:28 UTC 2024: ## Family-Owned Businesses Show Favoritism Towards Family CEOs, But Only Sometimes

**Atlanta, GA** – A new study published in the *Family Business Review* reveals that family-owned businesses, despite employing more than half of the U.S. workforce, hold their family CEOs to different accountability standards than non-family CEOs, particularly during the mid-stage of their tenure.

The research, conducted by Georgia State University’s Cecilia Gu and her team, analyzed 20 years of data from family-owned firms in Taiwan. They found that while both family and non-family CEOs are evaluated closely for financial performance in the middle of their tenure (typically 5-7 years), non-family CEOs are significantly more likely to be fired for poor financial performance. Non-family CEOs face a 40% chance of termination, compared to a 20% chance for family CEOs.

“Family-owned firms tend to be long-term oriented and don’t always use financial performance as a reason for turnover decisions,” explained Gu. However, “when financial performance does come into play, it usually happens at the mid-stage of CEO tenure.”

The study further revealed that during the early and late stages of a CEO’s tenure, family firms rely on other metrics besides financial performance to evaluate their leadership. Early on, the focus is on observing behavior, such as loyalty and other behavior-based outcomes. Later on, trust and proven abilities to grow the company are prioritized.

“Controlling members of family firms tend to be more patient with financial performance than other firms, because they are focused on building long-term financial wealth and long-term succession, rather than short-term performance,” said Gu.

This research provides valuable insights into the complex decision-making processes within family businesses. It debunks the simplistic notion that family members are always favored over non-family leaders, highlighting the nuanced and sometimes preferential treatment family CEOs receive, particularly when it comes to performance-based accountability.

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