The role of family ties in agency contracts

Drawing on data based on the entire population of Spanish newspapers over 2 7 years (1966-93), this study shows that firm performance and business risk are much stronger predictors of chief executive tenure when a firm's owner s and its executive have family ties and that the organizational consequenc es of CEO dismissal are more favorable when the replaced CEO is a member of the family owning the firm. The study also demonstrates that executives op erating under weakly relational (less ambiguous) contracts are held more ac countable for firm performance and business risk outcomes, even under nonfa mily contracting.