Do CEO and board characteristics matter? A study of Thai family firms

• We examine which characteristics of family CEOs increase firm value.
• We investigate which board characteristics are valuable in family-run firms.
• If family CEOs are young or have business expertise, firm value could be improved.
• Family CEOs who are in elite alumni networks lead to higher firm value.
• Age-diverse and politically-connected boards are beneficial to family CEOs.

Family businesses are dominant players in global economies. Using the data of family firms in a setting of weak institutions resulting from a deficiency of market-based management skills, we ask which CEO and board characteristics matter? The involvement by family members as CEOs is a common practice in family businesses. However, we find that family CEOs reduce firm value, indicating higher potential expropriation of minority shareholders or possible lower competency of family CEOs relative to professionals. Our results show that such negative effects could be moderated by certain characteristics of appointed CEOs. Family CEOs who are young, have business expertise, or are in the alumni network lead to higher firm value. Interestingly, the presence of family CEOs with a doctoral degree is negatively associated with firm value, which is possibly caused by their interest in research or innovation-related strategies. In addition, boards of directors could be designed by controlling families to support family CEOs. We find that the value of family CEO-run firms improves if their boards of directors are diverse in ages and have political ties, showing the importance of board roles in providing advice and access to external resources for family CEOs. Our analysis suggests a promising set of CEO and board characteristics of family firms in prolonging the survival of family-run firms.