Cofounders and the value of family firms

Prior literature documents the positive effect of the founders role on family-firm value. In this study, we examine whether the existence of cofounders has any effect on family firm value. We find that the outperformance of founder family firms is concentrated in family firms with cofounders as measured by Tobins q. Our results are robust when we use return on assets (ROA) as an alternative measure. These findings suggest that the presence of cofounders would reduce the potential risk arising from the absence of the sole founder and the power concentration in the sole founder and thus lead to higher firm value.