The Influence of CEO Type on Employee Downsizing in Family Firms : Evidence from Japan

This paper examines how family firm CEO type—that is, whether the CEO of a family firm is the founder, an heir, or a professional (outside) executive—influences downsizing decisions, and the moderating effects of firm name, geographical location, and financial crises on the relationship between CEO type and downsizing. Using a large dataset of firms listed on Japanese stock markets between 1991 and 2021, we show that family firms are less likely to downsize than non-family firms, and that this is driven by heir CEOs and professional CEOs. We find that the moderating effect of inclusion of the family name in the firm name varies according to CEO type; that family firms located outside Tokyo are less likely to downsize than family firms located in Tokyo; and that family firms downsized less during the 1997 Asian financial crisis and more during the 2008 global financial crisis