In sum, our primary dataset covers the 134 regions in 11 European countries where BvD, WVS and regional characteristics data are all available.<sup>20</sup>

# IV. MEASURING FAMILY MANAGEMENT

To construct our measures of family management we extract from the Amadeus database (i) the full names of each manager, (ii) the full names of each owner and (iii) the equity share of each owner. We treat each unique surname as a family and match the surnames in the list of owners to those in the list of managers. This enables us to measure the ownership share of the company accounted for by each family in the list of managers. Our baseline measure defines a firm to be family-owned-family-managed (FOFM) if (i) all managers belong to one family and (ii) that family owns more than 20% of the firm.<sup>21</sup> However, in robustness checks we redo our main specifications using three alternative measures. The first uses a 40% equity cutoff for family owners. The second uses a continuous measure defined as the share of managers with the same last name as the largest shareholder with more than 20% equity. The third exploits the information on manager titles provided by BvD and defines a firm to be FOFM if the largest owner with more than 20% equity has a manager with a CEO-like string in their title.<sup>22</sup> While our measure of family ownership is consistent with the previous literature, it is important to mention two main concerns to this method of classifying firms as FOFM. First, larger firms may have a greater propensity to use holding companies within ownership structures, which would lead to a spurious correlation between family management and firm size. We take a number of steps to address this concern. We start by exploiting the fact that BvD computes ultimate owners themselves using the network structure of the raw ownership data it acquires. So if Mr. Jones owns 100% of company A which owns 50% of company B, he will appear with a 50% ownership share of company B in our data. However, it is unlikely that BvD is able to catch the totality of indirect ownership. Therefore, we additionally match names of any company shareholders with those of individual shareholders to identify those set up in the same name as their owners (which is relatively common) and assign the ownership shares of those companies to the matched individuals. We also include two alternative specifications in our robustness checks. The first classifies firms as FOFM if using our baseline method but only computing ownership shares of the total firm ownership by individuals (i.e. we drop company shareholders). The second drops all firms with any company owners. The stability of our results across these alternative specifications reassures us that the observed relationship between firm size and family management is not mechanically produced by our measure. Moreover, our main specification examines the likelihood that a firm of a given size is family-owned as trust changes, which abstracts from these size-dependent measurement concerns.

> 20Our full dataset covers more than 265,000 firms, but not all countries have regions available that we were able to concord across all our datasets. Where regional variation is not exploited for identification, such as in the cross-country regressions, this full dataset is used. As shown in Table I, the 11 countries used in our primary dataset are Bulgaria, Bosnia and Herzogovina, Estonia, Finland, Germany, Italy, Netherlands, Poland, Spain, Switzerland and the Ukraine. 21The 20% equity definition is used in previous work classifying firms as family-owned, such as La Porta, Lopez-de-Silanes and Shleifer (1999). Importantly, a key difference between our measures and theirs is that we identify whether or not a firm that is family-owned is also family-managed.

> 22These vary by country and include titles such as “President”, “Director”, “Chief Executive” etc.

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