Abstract
Whether family firms create value is not conclusive, and most models treat a firm's type as exogenous. We find that whether a firm is family or non-family should be modeled as endogenous by using Hausman test and Heckman's (1979) two-step method. After controlling for the endogeneity, we find that family firms in Taiwan create value. Furthermore, we observe some firms switched their types from family to non-family or the other way around. We find that the switch should also be considered as endogenous, and the switches create value.