According to Fortune, in its special 2006 Fortune 500 edition, 27 Fortune 500 companies are managed by their founders. These 27 companies returned an average of 18.5% annually from 1995 to 2005, which is 7 percentage points better than the Fortune 500 average. Their profit growth also averaged 19.6% from 1995 to 2005, vs. 11.7% for the rest.

Another study by an Ohio State university finance professor of 2,300 largest US companies from 1993 to 2002 also found that 11% of those run by founders outperformed the broader stock market by eight percentage points a year.

Why do founder-CEOs perform better. Some thoughts:

- they care more. The companies are their life’s work, and they ar emore likely to embrace long-term strategies. It is conceivable that as parents, they care more about their babies than babysitters do. One founder said that there was ‘no way’ he was going to let the company fail.

- the founders also tend to be industry experts, not managerial mercenaries. They founded the company because they know the industry it is in, and would more likely not make acquisitions that are not on their field.