@article {19469, title = {Family Firms}, journal = {Journal of Finance}, volume = {58}, number = {5}, year = {2003}, note = {Reprinted in T. Beck, ed., Entrepreneurship in Developing Countries, Edward Elgar Publishing Company, 2009. }, pages = {2167-2201}, abstract = {We present a model of succession in a {\textcent}rm owned and managed by its founder. The founder decides between hiring a professional manager or leaving management to his heir, as well as on what fraction of the company to {\textsterling}oat on the stock exchange. We assume that a professional is a better manager than the heir, and describe how the founder{\textquoteright}s decision is shaped by the legal environment. This theory of separation of ownership from management includes the Anglo-Saxon and the Continental European patterns of corporate governance as special cases, and generates additional empirical predictions consistent with cross-country evidence. }, author = {Michael Burkhart and Fausto Panunzi and Andrei Shleifer} }