Mixing family with business: A study of Thai business groups and the families behind them

How does the structure of the families behind business groups affect the group's organization, governance, and performance? We construct a unique dataset of family trees and business groups for 93 of the largest business families in Thailand. We find a strong positive association between family size and family involvement in the ownership and control of the family businesses. The founders’ sons play a central role in both ownership and board membership, especially when the founder of the group is dead. Greater involvement by sons is also associated with lower firm-level performance, especially when the founder is dead. One hypothesis that emerges from our analysis is that part of the decay of family-run groups over time is due to the dilution of ownership and control across a set of equally powerful descendants of the founder, which creates a “race to the bottom” in tunneling resources out of the group firms.     

Measuring the return on household enterprise: What matters most for whom?

Return on assets (ROA) from household enterprise is crucial for understanding the well-being and productivity of households in developing economies. Yet the definition and measurement of household enterprise ROA remain inconsistent or unclear. We illustrate potential measurement problems with examples from various actual surveys. We then take advantage of a detailed integrated household survey to perform a robustness analysis, acting as if we had gathered less data than was actually the case, to see what matters and for whom. The three issues that matter most for accurate measurement of household enterprise ROA are the choice of accrual versus cash basis of income, the treatment of household's own labor in enterprise income, and the treatment of non-factor income. Also, this sensitivity matters most for a relatively poor region dominated by crop cultivation relative to a richer region with non-farm enterprises. Though the choice between accrued income and cash income matters less when the frequency of the data declines, there remains high sensitivity in longer-term and annualized data. We conclude the paper by providing recommendations on how to improve the survey questionnaires for more accurate measurement in field research.     

Natural disasters and the economy: some recent experiences from Southeast Asia

This paper uses recent examples of natural disasters from Southeast Asia to illustrate some important arguments discussed in the literature on natural disasters and the economy. First, the severity of the consequences of disasters depends not only on the natural hazards, but also on societal factors. Second, the effects of the disasters on physical and human capital could go far beyond the directly observable loss of properties and lives. Third, disasters could have positive long‐term consequences if they lead to a change in the total factor productivity of the economy. Fourth, the effects of disasters could spread beyond the country of origin, naturally and economically. Finally, assistance from the government provides implicit insurance that could crowd out private insurance, but the failures of the government in dealing with recent catastrophic disasters may help reduce the extent of this effect.