Highlights from the Baltic Family Business Conference 2026

Paper 1 | Legacy Creation in Modern Business Families: Patchwork and Multi-Parent Constellations

Presenter: Tobias Köllner (WIFU) | Discussant: Beata Żukowska (Maria Curie-Skłodowska University in Lublin)

The paper presented by Tobias Köllner (WIFU) explores how non-traditional family structures, specifically LGBTQ+ multi-parent and patchwork constellations, construct and transfer legacy. Focusing on a multi-generational hotel and restaurant in the Netherlands, the co-author shows how kinship and "familiness" are actively built through social and intentional practices rather than biological links. To maintain family cohesion and operational continuity, these families use unique informal governance tools such as co-parenting agreements and "pedagogical deep dive evenings". The discussant praised the paper's expansion of the family embeddedness perspective but raised important questions regarding the transferability of these informal governance innovations, the potential for successor identity conflict in multi-parent households, and the unique relational hurdles LGBTQ+ family firms face during internationalisation.

Paper 2 | The Talent Gap in Family Firms

Presenter: Morten Bennedsen (University of Copenhagen) | Discussant: Benjamin Maury (Hanken School of Economics)

Do family firms employ less measured cognitive talent than their non-family counterparts? Morten Bennedsen (University of Copenhagen) presented a paper investigating this complex issue using comprehensive Danish administrative and military-draft IQ data. The study uncovers a substantial "talent gap" in family firms, with employees scoring lower on average – a gap that becomes most pronounced at the top executive and managerial levels. The co-author identifies two primary drivers of this deficit: a nepotism effect where family members are promoted beyond their objective qualifications (thereby blocking high-ability outsiders), and a compensation penalty that makes family firms less competitive when bidding for top-tier talent. The discussant commended the study’s data-driven approach and its focus on dual internal labor markets, while suggesting that the authors more clearly connect this cognitive talent gap to firm productivity and evaluate its sensitivity to alternative family descriptions.

Paper 3 | Nepotism or Stewardship? CEO Succession and Market Valuation in Family Firms

Presenter: Oskar Kowalewski (IESEG School of Management) | Discussant: Janis Berzins (BI Norwegian Business School)

Oskar Kowalewski (IESEG School of Management) presented the stock market's reaction to boundary-crossing CEO transitions in family enterprises. Analyzing a large sample of CEO transitions, the paper finds that crossing the boundary between family and professional management yields a statistically insignificant average market reaction. However, the market rewards professionalization (transitioning from a family to a hired CEO) when the controlling family retains strong control rights (e.g., dual-class shares or high ownership), indicating that voluntary delegation is viewed as a credible commitment. The discussant highlighted that the delegation-credibility result is the study's core contribution, advising the authors to frame the paper around this finding rather than asymmetric pricing. He also raised concerns about selection endogeneity and noted that post-succession operating results show mixed outcomes, including an average post-transition decline in valuation multiples and an increase in leverage.

Paper 4 | Governance under Scrutiny: Family Firms and External Monitoring Cost after Expanded Audit Reporting

Presenter: Halit Gonenc (University of Groningen) | Discussant: Morten Bennedsen (University of Copenhagen)

Does the historical audit discount enjoyed by family firms survive in an era of increased corporate transparency? The paper presented by Halit Gonenc (University of Groningen) examines this question in the wake of the EU Expanded Audit Reporting (EAR) mandate. Utilizing a dataset of over 13,000 European firm-years, the co-author presents that family firms experienced a larger increase in audit fees post-EAR than non-family firms. This fee hike is primarily driven by entity-level Key Audit Matters and is heavily concentrated in family firms with weaker internal governance, such as excess control rights and CEO duality. The research shows that transparency reforms strengthen the external monitoring role of auditors, forcing family firms to make their informal governance strengths visible through formal, documentable structures.

Paper 5 | A Sensible Cost of Capital for Small Businesses

Presenter: Piet Sercu (KU Leuven) | Discussant: Bogdan Stacescu (BI Norwegian Business School)

The paper presented by Piet Sercu (KU Leuven) addresses the long-standing challenge of calculating a reliable cost of capital for unlisted small and family businesses. Because small business owners are typically undiversified and their investments are large and non-scalable, standard CAPM and total-beta models often fail or underestimate required returns. The authors introduce "full commitment" and "partial commitment" CAPM models that price unhedgeable residual risk based on the owner's risk aversion, leverage, and wealth. Using private firm data, they demonstrate that while stable, larger SMEs exhibit moderate costs of capital, smaller and more volatile firms face highly non-linear, sharply elevated hurdle rates. The discussant highlighted the conceptual value of adjusting for underdiversification, while offering insights on the empirical challenges of observing actual hurdle rates and linking these findings to the broader literature on private equity returns and wealth concentration.

Paper 6 | Family Roots, Startup Wings: Balancing Control and Growth in Family Startups Seeking VC Financing

Presenter: Valerio Pelucco (LUISS University) | Discussant: Himal Gautam (BI Norwegian Business School)

Valerio Pelucco (LUISS University) presented research on how young, family-run startups manage the growth-control dilemma when seeking venture capital (VC) financing. Relying on global startup data from 2000 to 2022, the study reveals that family startups prioritize maintaining control: they strategically delay their first VC round, accept smaller investment sums, give up less equity and fewer board seats. Although they face weaker M&A exit outcomes, family startups grow post-VC revenues twice as fast as their non-family counterparts. The paper suggests that family startups aggressively guard their independence going in, but are highly effective at scaling and releasing growth opportunities once they leverage external equity capital.

Paper 7 | Underperformance in Family Successions: The Role of Outside Work Experience

Presenter: Charlotte Ostergaard (Copenhagen Business School) | Discussant: Fabian Bernhard (EDHEC Business School)

The paper presented by Charlotte Ostergaard (Copenhagen Business School) investigates the persistent performance gap between family and professional successions, focusing specifically on the role of a successor's external professional background. Analyzing comprehensive administrative data on Norwegian family firms, the authors find that the historical underperformance associated with family successions is driven almost entirely by "inside" family successors who lack external experience. Conversely, "outside" family successors – those with at least three years of experience at other firms – perform on par with professional CEOs, suggesting that external employment provides crucial cognitive diversity and a broader management toolkit. The discussant praised the study's empirical design but urged the authors to consider alternative mechanisms to cognitive diversity, such as market signaling, leadership credibility, and network effects. He also highlighted the potential for reverse causality, noting that struggling firms might retain heirs out of immediate necessity, thereby linking a lack of outside experience to pre-existing business distress.

Paper 8 | Determinants of CEO Succession Decisions

Presenter: Marc Goergen (IE Business School) | Discussant: Renée Adams (University of Oxford)

The paper presented by Marc Goergen (IE Business School) examines the factors that influence CEO succession pathways in family firms, focusing on the determinants of who gets the job and the actions taken during the lead-up to the transition. The co-author presented why, despite the acknowledged importance of succession planning, a significant gap remains between its perceived importance and active implementation. He showed that determinants such as past firm performance, firm size, founder status, and the gender of the heir heavily influence whether a firm appoints a family member or transitions to professional management. The discussant highlighted the complex, multi-layered nature of these decisions, emphasizing the unique characteristics of founder-CEO successions and the persistent endogeneity challenges in empirical modeling. She raised key questions about how boards evaluate candidate pools, noting that while highly structured planning might render the succession event itself uninformative to the market, it remains essential to prevent family firms from "flying blind" during generational transitions.