Researchers in NUS Business School are experts in their individual areas and their work appear regularly in leading and prestigious publications. Below is a selection of research highlights.

 


Professor David Mitchell Reeb

Family Controlled Firms and Informed Trading: Evidence from Short Sales
Anderson, Ronald C., Reeb, David M. and Zhao, Wanli

Abstract
We investigate the relation between family ownership and the informational content of short sales in U.S. publicly-traded firms. Our analysis indicates that family firms, in aggregate, experience a substantially higher volume of abnormal short sales prior to negative earnings shocks than nonfamily firms, suggesting extensive informed trading. Additional testing indicates that family-control characteristics, such as board involvement, seem to intensify the informed short sale results. The analysis also suggests that daily short-sale interest in family firms contains useful information in forecasting stock returns; however, we find no discernable effect in nonfamily firms. An investment strategy of buying family firms with the lowest level of short sales and shorting family firms with the highest level of short sales generates monthly abnormal returns of 61 basis points, indicating an economically profitable trading strategy. One inference is that regulations designed to limit trading by those with access to material, non-public information appear ill-suited for family firms. Although our data does not allow a specific identification of short sellers, the analysis provides compelling evidence that informed trading via short sales occurs more readily in family firms than in nonfamily firms.

 
 

Assoc. Professor 
Yupana Wiwattanakantang

Adoptive Expectations: Rising Son Tournaments in Japanese Family Firms
Vikas Mehrotra, Randall Morck, Jungwook Shim, Yupana Wiwattanakantang

Abstract
A uniquely Japanese custom of adopting male heirs into business families allows family firms in Japan to overcome the constraint of sub-optimal succession faced by family firms elsewhere. Using a very large panel of exchange-listed firms from post-war Japan, we show that heir-managed firms perform at least as well, and in most cases better than, non-family firms in Japan. We further show that adopted heirs display marginally superior performance compared with direct descendents, although both groups outperform non-family firms. Keiretsu-affiliated non-family firms stack at the bottom of the group in terms of performance as well as valuation. Adopted heirs, not surprisingly, have superior educational qualifications compared with direct descendents, who in turn are better educated than founders. The average tenure of adopted heirs is 20 years in the top executive's position, very similar to descendent heirs, and significantly longer than the tenure of professional CEOs (6 years).

 
 

Assoc. Professor 
Chung Chi-Nien

Leadership Succession and Firm Performance in an Emerging Economy: Successor Origin, Relational Embeddedness, and Legitimacy 
Chung Chi-Nien, Xiaowei Rose Luo

Abstract

We examine how leadership transition affects firm performance in emerging economies. Building upon the social embeddedness and neo-institutional perspectives, we argue for the importance of alignment betwen successor origin and social context for firm performance. We suggest that as a baseline outside successors enhance firm profitability because of the large-scale and rapid changes in emerging markets. However, this outsider premium is reduced in firms embedded in family and business group relationships, where family and inside successors can better access network resources. But the outside premium is amplified in firms embedded in a mature marked-based logic, such as high-tech or foreign-invested firms, because the perceived legitimacy of outsiders facilitates resource acquisition. Our arguments are supported through the analysis of Taiwanese listed firms between 1996 and 2005.

 
 

Assoc. Professor 
Chung Chi-Nien

Filling or Abusing the Institutional Void? Ownership and Management Control of Public Family Businesses in an Emerging Market
Chung Chi-Nien, Xiaowei Rose Luo

Abstract

Despite increased attention given to family firms in the theory of organisation and management, the value of family governance in emerging markets is not clearly understood. We draw insights from agency and institutional economics perspectives to address the debate on whether family governance fills or abuses the void left by weaker market and legal institutions. We propose a dual focus on the pattern of family control and weak institutions to reconcile these opposed assessments. We analyze how various combinations of family control over ownership, strategy, and operations yield different benefits and costs for the operational performance of firms in the absence of strong market and legal institutions. The uneven development of market institutions across industries and the impact of independent directors reinforce the importance of separating different patterns of family control. We find support for our hypotheses when tested on a data set consisting of all publicly listed firms in Taiwan between 1996 and 2005. Our study contributes to a deeper understanding of family businesses in emerging markets, highlights the importance of weak institutions in shaping relative agency costs, and illuminates the differential effects of independent directors.

 
 

Professor
Sea-jin Chang

When Does Transitioning From Family To Professional Management Improve Firm Performance?
Sea-jin Chang, Jungwook Shim

Abstract

Using long-term data on Japanese family firms, this study explores when the transition from family to professional management leads to better performance. In order to avoid endogeneity bias, we employ propensity score matching and difference-in-differences techniques. We find evidence that firms that transition from family to professional CEOs outperform those that maintain family leadership. This performance improvement is more pronounced when families maintain high ownership control but leave no family legacy behind, when the transition moves from non-founder family managers to professionals, and when professional managers graduated from elite universities.

The full version is available for download here

 
 

Assoc. Professor
Marleen Dieleman

Sheng Siong Supermarket: Building and Sustaining Competitive Advantage
Marleen Dieleman, Yi Rong Loh, Ye Jun Lee

Abstract

Sheng Siong was the third-largest supermarket chain in Singapore. Its chief executive officer co-founded it with his two brothers in 1985. Sheng Siong's business model was well suited to cater to the price-sensitive and more traditional customer segment in Singapore, with a dominant presence in suburban areas called "heartlands." It also had a unique corporate philosophy, which was influenced by the personal values of its founding family. However, the market became increasingly saturated, competitors were aggressive and costs were rising. The key question was whether Sheng Siong's original competitive advantage was sustainable and how it could grow. 

The full version is available for download here