Multiple Founders and Firm Value

In this paper, we highlight the existence of multi-founder firms, which were founded by multiple individuals (with no family connections) who are still actively involved in the firm as directors and/or managers (e.g., Google and Yahoo). These firms provide a unique setting to determine whether the involvement of multiple founders provides shareholders with incremental benefits over other firms. Our analysis indicates that multi-founder firms are more valuable than all other types of firms, including single-founder firms and family firms, with the valuation premium positively related to the number of founders involved in the firm. Further analysis confirms that this valuation premium is linked to the direct involvement of the multiple founders as chairmen, CEOs, directors and managers, and not other uncontrolled factors. Our results also suggest that shareholders benefit more when founders are involved at the board level, rather than in non-CEO executive positions