"A number of firms in northern Europe and especially in Denmark are owned by private foundations similarly to what would have been the case if the Ford Foundation had owned a majority of the shares in Ford Motor Company. Foundation-owned companies appear to perform surprisingly well in terms of profitability and growth, despite lacking governance mechanisms such as profit incentives or takeover threats. Given their non-profit ownership, they might be expected to behave more responsibly towards stakeholders, such as employees or customers (Hansmann, 1980), but so far there has been little empirical evidence to support this hypothesis. This paper presents new research on the reputation and responsibility of foundation-owned companies. In a panel of large Danish companies 2001–11 we find that foundation-owned firms have better reputations and are regarded as more socially responsible in corporate image ratings. Secondary evidence on labour market behaviour is consistent with these findings. Using matched employer–employee data we show that foundation-owned companies are more stable employers, pay their employees better, and keep them for longer. Altogether, the evidence indicates that foundation-ownership is associated with more responsible business behaviour towards employees."

Support: Digital