Family ownership, family management, and multinationality: Evidence from India

Purpose The purpose of this paper is to investigate the relationship between dividends and family involvement as well as corporate governance characteristics among Turkish public firms. Design/methodology/approach Using panel data on Turkish firms listed on the Borsa Istanbul 100 index for 2006–2014, three models are estimated. For the first two models, where the dependent variables are the dividend payout ratio and dividend yield, respectively, tobit regressions are run. The last model, which employs a dividend dummy as the dependent variable, is estimated with logistic regression. Findings There is a positive and concave relationship between family ownership and dividends. The existence of a family chairman reduces dividends. There is a positive association between board size and dividends and this relationship is weaker for firms with higher levels of family ownership. Finally, the ratio of independent directors on the board is negatively associated with dividends. Practical implications The findings imply that firms with substantial family ownership and active family participation in management are more likely to send a negative signal to minority shareholders by paying lower dividends. In addition, minority shareholders should pay attention to the board structure of firms in which they invest. Originality/value This study is one of the few to analyze the nonlinear relationship between family ownership and dividend payments as well as the role of family management in a developing country. Second, it investigates the role of board characteristics in explaining dividend payment decisions.

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Family firms, board structure and firm performance: evidence from top Indian firms

International Journal of Law and Management ◽

10.1108/ijlma-02-2016-0013 ◽

2017 ◽

Vol 59 (5) ◽

pp. 699-717 ◽

Cited By ~ 10

Author(s):

R. Rathish Bhatt ◽

Sujoy Bhattacharya

Keyword(s):

Firm Performance ◽

Family Firms ◽

Independent Directors ◽

Family Management ◽

Family Ownership ◽

Board Structure ◽

Board Size ◽

Content Type ◽

Board Characteristics ◽

The Relationship

Purpose Given the prevalence of family-run businesses in India, this paper aims to empirically investigate the impact of family firms on the relationship between firm performance and board characteristics. The effectiveness of board characteristics such as independent directors, chairman independence, role duality, non-executive directors, board busyness, board size, board meetings and board attendance are studied in the Indian context. Design/methodology/approach The sample consists of top-listed firms in India for the period 2002 to 2012. Board index was constructed to capture the governance quality of the firm. The authors also study the relationship between board structure and firm performance by segregating the sample based on family management, family ownership and family representative directors. Random effects model was used for the regression analysis in the study. Findings The authors find a negative effect of board structure on firm performance in family firms compared to non-family firms. Contrary to the most Western literature, family management was not found to significantly affect firm performance as compared to that of professionally managed firms. In the subset analysis of family firms, higher proportion of family ownership and family representative directors did not show any significant impact on the firm performance. Having a higher proportion of independent directors, larger board size or an independent chairman does not appear to improve this insignificant relationship between family firms and firm performance. Also, in family firms, no significant difference in performance is noticed before and during recession period. Originality/value The study uses a self-defined corporate governance index to measure the governance parameters, specifically the board characteristics. The results documented in this study adds to the debate on the generalizability of the findings in Western governance studies in emerging markets like India with unique institutional development background.

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The influence of family board involvement on earnings management

Corporate Ownership and Control ◽

10.22495/cocv18i2art8 ◽

2021 ◽

Vol 18 (2) ◽

pp. 106-123

Author(s):

Fabio Franzoi ◽

Mark Mietzner ◽

Franziska Thelemann

Keyword(s):

Earnings Management ◽

Family Involvement ◽

Family Firms ◽

Management Practices ◽

Real Earnings Management ◽

Family Management ◽

Family Ownership ◽

Executive Board ◽

Listed Firms ◽

Founding Family

This study explores the influence of family ownership and family board involvement on earnings management in German-listed firms. We extend existing research by applying a more precise measurement of family involvement that offers new insights into a family’s effect on earnings management behaviour. Our models suggest that the degree of management involvement of families is a significant driver of earnings management, a factor disregarded so far in the literature. Furthermore, the distinction between founding family and family ownership should be carefully considered. Employing a sample of 278 firms from 2000-2013, we find that greater family management presence on the executive board is associated with more earnings-decreasing accrual-based earnings management practices and more real earnings management activities via discretionary expenses. This is viewed as less value-destroying REM activity to meet earning targets. Overall, German family firms seem to use their powerful positions as shareholders and executive board members to expropriate shareholders and manage earnings to meet targets while maintaining family wealth

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Family Management, Family Ownership, and Downsizing: Evidence from S&P 500 Firms

Family Business Review ◽

10.1177/089448651002300202 ◽

2010 ◽

Vol 23 (2) ◽

pp. 109-130 ◽

Cited By ~ 83

Author(s):

Jörn Block

Keyword(s):

Social Responsibility ◽

Family Firms ◽

Family Management ◽

Family Ownership ◽

Firm Profitability ◽

The Relationship

Little is known about the relationship between family firms and downsizing. This study aims to close this gap. The study distinguishes between family management and family ownership as two distinct dimensions of family firms and analyzes their respective influences on downsizing. The findings suggest that the extent of family ownership decreases the likelihood of deep job cuts, whereas family management has no impact. However, family management is found to moderate the relationship between firm profitability and the likelihood of downsizing. It is suggested that family owners care more about their reputation for social responsibility than do other owners, motivating them to avoid deep job cuts.

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Ownership structure and market valuation of family groups in Chile

Corporate Ownership and Control ◽

10.22495/cocv3i2p10 ◽

2006 ◽

Vol 3 (2) ◽

pp. 90-105 ◽

Cited By ~ 1

Author(s):

Fernando Lefort

Keyword(s):

Ownership Structure ◽

Market Valuation ◽

Family Management ◽

Family Ownership ◽

Control Mechanisms ◽

Corporate Structure ◽

Listed Firms ◽

And Control ◽

The Relationship ◽

A Company

In this paper I provide a summary description of corporate structure in Chilean firms and explain the evolution of conglomerates and capital markets in the Chilean economy. Specifically, I look at the control mechanisms and the identity of controllers of listed non-financial companies in Chile. Using a database developed by Lefort and Walker (2000, 2003b), I look at the relationship between family ownership and control and market valuation of listed firms in Chile. The evidence provided in this paper indicates that in the case of the highly concentrated Chilean companies, family management of a company is associated to a market discount. This evidence is consistent with the hypothesis of imperfect correlation of talent across generations. However, as I explained earlier in the paper, most Chilean groups have less than 30 years of existence and therefore, the succession problem is not likely to be very important in Chile

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