30.05.2023 Professor Rapp Presents "Founding Family Firms and Labor Cost Stickiness" at the EAA
May 30th, 2023
Last week, Professor Rapp traveled to the annual conference of the European Accounting Association (EAA), where he presented the paper "Founding Family Firms and Labor Cost Stickiness" (co-authored by Carsten Gnoth and Iuliia Udoieva).
In the paper, we study the role of founding family control on labor cost stickiness, i.e. the phenomenon that labor costs are non-linear in firm activity. The paper argues that labor cost stickiness is a double-sided sword for family firms:
- On the one hand side, it may be interpreted as long-term commitment to employees and employment and thus may help to preserve socio-economic wealth (SEW).
- On the other hand, it increases operating leverage, reduces operating performance, and thus jeopardizes long-term growth)
Many thanks to Aalto University School of Business for hosting the conference and to the organizing team (Seppo Ikäheimo (Chair), Huikku Jari (Deputy Chair), Vikash Kumar Sinha, David Derichs, Ph.D., Vaivio Juhani, Jukka Sihvonen, Bianca Beyer, as well as Stina Mäkelä-Korhonen) for all their efforts and congratulations for a very successful event.