International Journal of Advance Research Publication and Reviews

International Journal of Advance Research Publication and Reviews
Peer-Reviewed | Multi-Disciplinary Journal

ISSN: 3049-0103 (O)

Impact Factor: 4.33

Founder Leadership and Corporate Financial Decisions: A Comparative Review of North America, Europe, and Asia

Author

Marie Janssens, Luc Peeters

Abstract

 Founder leadership can influence investment, financing, and the financial capacity needed to withstand disruption. Its consequences depend on ownership incentives, governance, and access to capital. This comparative narrative review examines North American, European, and Asian evidence on capital structure, investment, liquidity, performance, and resilience. Coverage includes the United States and Canada; France, Germany, Italy, and Denmark; and selected Asian economies. The synthesis distinguishes direct founder studies from research on family control and financial conditions. European findings add evidence on control-preserving finance, active family involvement, credit lines, professional succession, and pandemic performance. Across the three regions, founder and family involvement is associated with varied outcomes that cannot be explained by geography alone. Differences in sectors, firm maturity, leadership definitions, and research design limit direct comparisons. The paper develops a conditional framework connecting founder knowledge and authority with oversight and financing constraints. It recommends comparable leadership measures, careful analysis of succession, and outcomes that capture actual financial and operating continuity. The practical implication is to evaluate the decision process and available financing alternatives alongside the leader’s identity.

Keywords

Founder CEOs; Financial decision making; Capital structure; Corporate liquidity; Financial resilience; Comparative corporate governance

Full Text:

Download Paper PDF

References

  • Abebe, M. A., Li, P., Acharya, K., & Daspit, J. J. (2020). The founder chief executive officer: A review of current insights and directions for future research. Corporate Governance: An International Review, 28(6), 406–436. https://doi.org/10.1111/corg.12348
  • Akhter, A., & Maruf-Ul-Alam, M. (2019). Determinants of optimal capital structure: An empirical study on manufacturing companies in Bangladesh. Journal of Banking & Financial Services, 11(2), 225–252.
  • Alam, M. A. U., Alam, M. M. U., & Nazrul, T. (2025). Founder CEOs and utility firms’ financial choices. Journal of Risk and Financial Management, 18(10), Article 531. https://doi.org/10.3390/jrfm18100531
  • Alam, M. A. U., Alam, M. M. U., & Nazrul, T. (2026). Founder CEO leadership and financial resilience in U.S. critical infrastructure firms: Evidence on solvency, stability and bankruptcy risk. Journal of Finance and Accountancy, 36, 1–26. https://wp.aabri.com/manuscripts/264136.pdf
  • Alam, M. M. U., Nazrul, T., & Alam, M. A. U. (2026). Corporate liquidity and firm resilience during monetary tightening cycles. Financial Markets, Institutions and Risks, 10(3), 28–48. https://doi.org/10.61093/fmir.10(3).28-48.2026
  • Almeida, H., Campello, M., & Weisbach, M. S. (2004). The cash flow sensitivity of cash. Journal of Finance, 59(4), 1777–1804. https://doi.org/10.1111/j.1540-6261.2004.00679.x
  • Altman, E. I. (1968). Financial ratios, discriminant analysis and the prediction of corporate bankruptcy. Journal of Finance, 23(4), 589–609. https://doi.org/10.1111/j.1540-6261.1968.tb00843.x
  • Amore, M. D., Minichilli, A., & Corbetta, G. (2011). How do managerial successions shape corporate financial policies in family firms? Journal of Corporate Finance, 17(4), 1016–1027. https://doi.org/10.1016/j.jcorpfin.2011.05.002
  • Amore, M. D., Pelucco, V., & Quarato, F. (2022). Family ownership during the Covid-19 pandemic. Journal of Banking & Finance, 135, Article 106385. https://doi.org/10.1016/j.jbankfin.2021.106385
  • Anderson, R. C., & Reeb, D. M. (2003). Founding-family ownership and firm performance: Evidence from the S&P 500. Journal of Finance, 58(3), 1301–1328. https://doi.org/10.1111/1540-6261.00567
  • Andres, C. (2008). Large shareholders and firm performance—An empirical examination of founding-family ownership. Journal of Corporate Finance, 14(4), 431–445. https://doi.org/10.1016/j.jcorpfin.2008.05.003
  • Bates, T. W., Kahle, K. M., & Stulz, R. M. (2009). Why do U.S. firms hold so much more cash than they used to? Journal of Finance, 64(5), 1985–2021. https://doi.org/10.1111/j.1540-6261.2009.01492.x
  • Bennedsen, M., Nielsen, K. M., Pérez-González, F., & Wolfenzon, D. (2007). Inside the family firm: The role of families in succession decisions and performance. Quarterly Journal of Economics, 122(2), 647–691. https://doi.org/10.1162/qjec.122.2.647
  • Bertrand, M., & Schoar, A. (2003). Managing with style: The effect of managers on firm policies. Quarterly Journal of Economics, 118(4), 1169–1208. https://doi.org/10.1162/003355303322552775
  • Booth, L., Aivazian, V., Demirgüç-Kunt, A., & Maksimovic, V. (2001). Capital structures in developing countries. Journal of Finance, 56(1), 87–130. https://doi.org/10.1111/0022-1082.00320
  • Campello, M., Giambona, E., Graham, J. R., & Harvey, C. R. (2012). Access to liquidity and corporate investment in Europe during the financial crisis. Review of Finance, 16(2), 323–346. https://doi.org/10.1093/rof/rfr030
  • Choi, Y. R., Zahra, S. A., Yoshikawa, T., & Han, B. H. (2015). Family ownership and R&D investment: The role of growth opportunities and business group membership. Journal of Business Research, 68(5), 1053–1061. https://doi.org/10.1016/j.jbusres.2014.10.007
  • Claessens, S., Djankov, S., Fan, J. P. H., & Lang, L. H. P. (2002). Disentangling the incentive and entrenchment effects of large shareholdings. Journal of Finance, 57(6), 2741–2771. https://doi.org/10.1111/1540-6261.00511
  • Claessens, S., Djankov, S., & Lang, L. H. P. (2000). The separation of ownership and control in East Asian corporations. Journal of Financial Economics, 58(1–2), 81–112. https://doi.org/10.1016/S0304-405X(00)00067-2
  • Croci, E., Doukas, J. A., & Gonenc, H. (2011). Family control and financing decisions. European Financial Management, 17(5), 860–897. https://doi.org/10.1111/j.1468-036X.2011.00631.x
  • Custódio, C., & Metzger, D. (2014). Financial expert CEOs: CEO’s work experience and firm’s financial policies. Journal of Financial Economics, 114(1), 125–154. https://doi.org/10.1016/j.jfineco.2014.06.002
  • Davis, J. H., Schoorman, F. D., & Donaldson, L. (1997). Toward a stewardship theory of management. Academy of Management Review, 22(1), 20–47. https://doi.org/10.5465/amr.1997.9707180258
  • Dittmar, A., & Mahrt-Smith, J. (2007). Corporate governance and the value of cash holdings. Journal of Financial Economics, 83(3), 599–634. https://doi.org/10.1016/j.jfineco.2005.12.006
  • Fahlenbrach, R. (2009). Founder-CEOs, investment decisions, and stock market performance. Journal of Financial and Quantitative Analysis, 44(2), 439–466. https://doi.org/10.1017/S0022109009090139
  • Frank, M. Z., & Goyal, V. K. (2009). Capital structure decisions: Which factors are reliably important? Financial Management, 38(1), 1–37. https://doi.org/10.1111/j.1755-053X.2009.01026.x
  • Gómez-Mejía, L. R., Haynes, K. T., Núñez-Nickel, M., Jacobson, K. J. L., & Moyano-Fuentes, J. (2007). Socioemotional wealth and business risks in family-controlled firms: Evidence from Spanish olive oil mills. Administrative Science Quarterly, 52(1), 106–137. https://doi.org/10.2189/asqu.52.1.106
  • Graham, J. R., & Harvey, C. R. (2001). The theory and practice of corporate finance: Evidence from the field. Journal of Financial Economics, 60(2–3), 187–243. https://doi.org/10.1016/S0304-405X(01)00044-7
  • Graham, J. R., Harvey, C. R., & Puri, M. (2013). Managerial attitudes and corporate actions. Journal of Financial Economics, 109(1), 103–121. https://doi.org/10.1016/j.jfineco.2013.01.010
  • Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9(2), 193–206. https://doi.org/10.5465/amr.1984.4277628
  • Haque, F., Arun, T. G., & Kirkpatrick, C. (2011). Corporate governance and capital structure in developing countries: A case study of Bangladesh. Applied Economics, 43(6), 673–681. https://doi.org/10.1080/00036840802599909
  • Harford, J., Mansi, S. A., & Maxwell, W. F. (2008). Corporate governance and firm cash holdings in the US. Journal of Financial Economics, 87(3), 535–555. https://doi.org/10.1016/j.jfineco.2007.04.002
  • Islam, R., & Maruf-Ul-Alam, M. (2021). Capital structure and firms’ performance: Evidence from manufacturing sector of Bangladesh. Jagannath University Journal of Business Studies, 9(1 & 2), 61–90.
  • Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X
  • Kannan-Narasimhan, R., Wang, R., & Zhu, P. (2023). Founder versus agent CEOs: Effects of founder status and power on firm innovation and cost of capital. Journal of Business Research, 167, Article 114180. https://doi.org/10.1016/j.jbusres.2023.114180
  • Khanna, T., & Palepu, K. (2000). Is group affiliation profitable in emerging markets? An analysis of diversified Indian business groups. Journal of Finance, 55(2), 867–891. https://doi.org/10.1111/0022-1082.00229
  • Lins, K. V., Volpin, P., & Wagner, H. F. (2013). Does family control matter? International evidence from the 2008–2009 financial crisis. Review of Financial Studies, 26(10), 2583–2619. https://doi.org/10.1093/rfs/hht044
  • Malmendier, U., & Tate, G. (2005). CEO overconfidence and corporate investment. Journal of Finance, 60(6), 2661–2700. https://doi.org/10.1111/j.1540-6261.2005.00813.x
  • Malmendier, U., Tate, G., & Yan, J. (2011). Overconfidence and early-life experiences: The effect of managerial traits on corporate financial policies. Journal of Finance, 66(5), 1687–1733. https://doi.org/10.1111/j.1540-6261.2011.01685.x
  • Marquis, C., & Tilcsik, A. (2013). Imprinting: Toward a multilevel theory. Academy of Management Annals, 7(1), 193–243. https://doi.org/10.1080/19416520.2013.766076
  • Maury, B. (2006). Family ownership and firm performance: Empirical evidence from Western European corporations. Journal of Corporate Finance, 12(2), 321–341. https://doi.org/10.1016/j.jcorpfin.2005.02.002
  • Mehrotra, V., Morck, R., Shim, J., & Wiwattanakantang, Y. (2013). Adoptive expectations: Rising sons in Japanese family firms. Journal of Financial Economics, 108(3), 840–854. https://doi.org/10.1016/j.jfineco.2013.01.011
  • Miller, D., Le Breton-Miller, I., Lester, R. H., & Cannella, A. A., Jr. (2007). Are family firms really superior performers? Journal of Corporate Finance, 13(5), 829–858. https://doi.org/10.1016/j.jcorpfin.2007.03.004
  • Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187–221. https://doi.org/10.1016/0304-405X(84)90023-0
  • Pérez-González, F. (2006). Inherited control and firm performance. American Economic Review, 96(5), 1559–1588. https://doi.org/10.1257/aer.96.5.1559
  • Saito, T. (2008). Family firms and firm performance: Evidence from Japan. Journal of the Japanese and International Economies, 22(4), 620–646. https://doi.org/10.1016/j.jjie.2008.06.001
  • Sraer, D., & Thesmar, D. (2007). Performance and behavior of family firms: Evidence from the French stock market. Journal of the European Economic Association, 5(4), 709–751. https://doi.org/10.1162/JEEA.2007.5.4.709
  • Ullah, S., & Zhang, D. (2016). The influence of founder status on firm performance: Empirical evidence from Canadian IPO firms. International Journal of Economics and Finance, 8(11), 134–149. https://doi.org/10.5539/ijef.v8n11p134
  • Villalonga, B., & Amit, R. (2006). How do family ownership, control and management affect firm value? Journal of Financial Economics, 80(2), 385–417. https://doi.org/10.1016/j.jfineco.2004.12.005
  • Yeh, Y.-H., Lee, T.-S., & Woidtke, T. (2001). Family control and corporate governance: Evidence from Taiwan. International Review of Finance, 2(1–2), 21–48. https://doi.org/10.1111/1468-2443.00014
  • Young, M. N., Peng, M. W., Ahlstrom, D., Bruton, G. D., & Jiang, Y. (2008). Corporate governance in emerging economies: A review of the principal–principal perspective. Journal of Management Studies, 45(1), 196–220. https://doi.org/10.1111/j.1467-6486.2007.00752.x
  • Zheng, H., Piao, X., & Park, S. (2021). The role of founder-CEO, human capital and legitimacy in venture capital financing in China’s P2P lending industry. Sustainability, 13(4), Article 1625. https://doi.org/10.3390/su13041625
  • Zhong, X., Song, T., & Ren, L. (2023). The role of founder reign in explaining family firms’ R&D investment: Evidence from China. European Journal of Innovation Management, 26(2), 422–445. https://doi.org/10.1108/EJIM-01-2021-0068
Top