Does one size fit all? A configurational approach to board effectiveness in limiting the excess cash

2021 ◽  
Vol 59 (13) ◽  
pp. 136-163
Author(s):  
Marina Brogi ◽  
Carmen Gallucci ◽  
Rosalia Santulli
Keyword(s):  
Internal Control ◽  
Family Firms ◽  
Qualitative Comparative Analysis ◽  
Cash Holdings ◽  
Type Ii ◽  
Minority Shareholders ◽  
Board Effectiveness ◽  
Control Female ◽  
Content Type ◽  
Configurational Approach

Purpose The study, by focusing on a context dominated by firms with a concentrated ownership, in which type-II agency problems (principal-principal conflicts) may occur, aims to depict which board configurations may be effective in protecting minority shareholders by mitigating the risk of controlling shareholders' expropriation via cash holdings.Design/methodology/approach The research adopts a configurational approach and empirically conducts a fuzzy set/qualitative comparative analysis on a sample of 268 Italian listed companies.Findings The analysis depicts three combinations of board configurations and ownership structures that can be considered effective, namely Active Independent Control, Female Active Control and Double Internal Control.Originality/value The study revisits the topic of the risk of expropriation via cash holdings in a type-II agency problem framework and delineates the meaning of board effectiveness in a mature context ruled by family firms, like Italy. Furthermore, by drawing on a configurational approach, it overcomes the causality relationship between each board characteristic and cash holdings policies and reasons from a “bundle” perspective.

Family directors, independent directors, remuneration committee and executive remuneration in Malaysian listed family firms

2019 ◽  
Vol 28 (1) ◽  
pp. 24-47
Author(s):  
Ling Jong ◽  
Poh-Ling Ho
Keyword(s):  
Family Relationships ◽  
Family Firms ◽  
Positive Influence ◽  
Independent Directors ◽  
Type Ii ◽  
Minority Shareholders ◽  
Content Type ◽  
Agency Conflict ◽  
Executive Remuneration ◽  
Significant Positive Influence

Purpose The purpose of this paper is to examine the influence of family directors and independent directors on executive remuneration of listed family firms in Malaysia, and their involvement in remuneration committee on executive remuneration. Design/methodology/approach Fixed effect estimation is employed to examine 1,395 firm-year observations from 2010 to 2014. Findings Family and independent directors do not have statistically significant influence on executive remuneration. Rather, family ownership exerts a significant positive influence on executive remuneration. This study also reveals that the interaction of family CEOs with the family directors on remuneration committee exerts a significant positive influence on executive remuneration. Research limitations/implications The measurement of executive remuneration excludes the share options due to the non-disclosure of this information in the annual reports. Practical implications The findings would be useful to the policy-makers and regulators in appraising the governance measures of remuneration arrangement. Originality/value This study premises on the Type II agency conflict between controlling shareholders and minority shareholders. Independent directors could not mitigate the Type II agency conflict via the governance of executive remuneration. They are not the effective governance mechanism that the minority shareholders can rely on. The additional analyses provide theoretical implication that the pervasive Type II agency conflict is ameliorated when the CEOs do not have family relationships with the controlling family shareholders.

Family control, agency conflicts, corporate cash holdings and firm value

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ruchi Moolchandani ◽  
Sujata Kar
Keyword(s):  
Firm Value ◽  
Family Firms ◽  
Cash Holdings ◽  
Minority Shareholders ◽  
Content Type ◽  
Family Control ◽  
Indian Family ◽  
Agency Conflict ◽  
Cash Reserves ◽  
Corporate Cash Holdings

PurposeThis paper examines whether family control exerts any influence on corporate cash holdings in Indian listed firms. It also examines how this accumulated cash of family firms impacts firm value.Design/methodology/approachThe study uses dynamic panel data regression estimated using two-step system generalized method of moments (GMM) on S&P BSE 500 firms during 2009–2018 for testing the repercussions of family control on the cash levels of a firm. Further, fixed effects regression has been employed for the valuation analysis.FindingsEstimation results showed that family control negatively impacts cash holdings in Indian firms. Further, the cash accumulation by family firms adversely affects the market valuation of the firm. These findings signal a principal–principal (P-P) agency conflict in Indian family firms, i.e. friction between family owners and minority shareholders' interests. Minority shareholders fear that a part of the cash reserves will be used by family members for personal benefits. Thus, they discount cash reserves in family firms.Originality/valueThe study adds to the determinants of corporate cash holdings in emerging markets. To the best of the authors’ knowledge, this is the first study from India investigating family control as a determinant of cash policy. It sheds light on the P-P agency conflict in Indian family firms. P-P agency conflict is less researched in cash holdings literature as opposed to the principal–agent managerial disputes. Also, the study uses a more comprehensive definition of family control rather than just considering the ownership as used in prior cash holding research.

A Configurational Approach to Family Firm Innovation

2019 ◽  
Vol 32 (2) ◽  
pp. 154-173 ◽  
Author(s):  
Vasiliki Kosmidou ◽  
Manju K. Ahuja
Keyword(s):  
Comparative Analysis ◽  
Fuzzy Set ◽  
Family Firms ◽  
Qualitative Comparative Analysis ◽  
Firm Innovation ◽  
Research And Practice ◽  
Configurational Approach ◽  
The Family ◽  
Innovation Model ◽  
Privately Owned

This article develops an integrated framework for the examination of innovation drivers in small and privately owned family firms. Drawing from the family-driven innovation model, we study how factors at the family, the firm, and the environment level combine into distinct configurations that spur innovation. Analyzing 277 family firms using fuzzy-set qualitative comparative analysis, we find six configurations leading to high innovation and show that none of the antecedents is necessary for it. Building inductively on our configurations, we also derive propositions about the combinations of factors leading to high innovation. Implications for research and practice are discussed.

scholarly journals Family firm and analyst forecasts in an emerging economy

2017 ◽  
Vol 55 (9) ◽  
pp. 2018-2037 ◽  
Author(s):  
Xiaoxiang Zhang ◽  
Jo-Ting Wei ◽  
Hsin-Hung Wu
Keyword(s):  
Family Firms ◽  
Stock Exchange ◽  
Emerging Market ◽  
Population Sample ◽  
Analyst Forecasts ◽  
Analyst Forecast ◽  
Minority Shareholders ◽  
Content Type ◽  
Earnings Smoothness ◽  
Forecast Quality

Purpose The purpose of this paper is to examine how family firms affect analyst forecast dispersion, accuracy and optimism and how earnings smoothness as the moderating factor, affects these relationships in an emerging market context. Design/methodology/approach This paper uses the population sample of firms listed on the Taiwan Stock Exchange from 2009 to 2010 as the research sample, which includes 963 firm-year observations. Findings The findings show that analysts following family firms are more likely to have more dispersed, less accurate and more optimism biased forecasts than those following nonfamily firms. Earning smoothness is mainly used by nonfamily firms as a signaling strategy to improve analyst forecast quality. In contrast, earnings smoothness is mainly used by families as a garbling strategy, stimulating forecast optimism. Only earnings smoothness in family firms with a high level of family ownership concentration is likely to be signaling-oriented to improve analyst forecast accuracy and mitigate analyst optimism biases. Originality/value Emerging markets are not only featured by prevailing principal-principal conflicts but also have multiple levels of agency conflicts among large shareholders, minority shareholders and professionally hired managers. This research reveals the multiple governance roles of family owners in affecting analyst forecast quality, including their entrenchment role in extracting private benefits of control through opaque environments and market discipline distortion role in aligning interests between managers and families without prioritizing meeting or beating analyst forecasts, both at the cost of minority shareholders. This research further disentangles the intertwined signaling oriented and garbiling oriented incentives associated with earnings smoothness under family governance.

Another hybrid? Family businesses as venture capitalists

2017 ◽  
Vol 7 (3) ◽  
pp. 329-350 ◽  
Author(s):  
Torbjörn Ljungkvist ◽  
Börje Boers
Keyword(s):  
Venture Capital ◽  
Family Business ◽  
Family Firms ◽  
Family Businesses ◽  
Board Members ◽  
Family Ownership ◽  
Venture Capitalists ◽  
Ethical Awareness ◽  
Minority Shareholders ◽  
Content Type

Purpose This paper addresses the phenomenon of venture capital firms which are also family businesses (VCFBs). The purpose of this paper is to explore and understand the phenomenon of VCFB by answering the following questions: What are the features of professionalization in VCFBs? And, how do professionalization and types of family businesses explain the strategies and governance of VCFBs? Design/methodology/approach As an explorative case study, it maps the Swedish venture capital (VC) industry and compares two VCFBs and their business investments with regard to strategy and governance. Findings By suggesting two major configurations, the study explains how family business development and levels of professionalization relate to differences in VCFBs’ strategies, which in turn, affect their governance. The personal VCFB features active owners who personally take responsibility roles and strongly focus on customers and relationships. The administrative VCFB strongly focuses on predetermined financial metrics, high ethical awareness among board members, and ongoing interplay between the active family board members and minority shareholders. Research limitations/implications The study was conducted in Sweden and concerns Swedish VCFBs. The paper contributes to the literature by combining the two currently separate research streams, i.e. family business and VC, highlighting the importance and consequences of family ownership in VC businesses. Practical implications The present study provides stock market investors and stock analysts with a deeper understanding of VCFBs’ strategy incentives. By identifying the kind of VCFB and its relation to strategy, more reasonable assessments and analyses of the VCFBs’ actions will be possible. Family firms willing to accept VC-finance should consider the type of VC and the potential consequences of family ownership. Originality/value This study is the first to classify VC firms as family businesses. Moreover, it shows the features of professionalization in VCFBs by suggesting a set of configurations.

Which Competitive Strategy Fits Better to Different Family-Business Profiles?

2022 ◽  
pp. 27-46
Author(s):  
Tomás F. González-Cruz ◽  
Norat Roig-Tierno
Keyword(s):  
Firm Performance ◽  
Family Business ◽  
Competitive Strategy ◽  
Family Firms ◽  
Qualitative Comparative Analysis ◽  
Family Firm ◽  
Tourism Industry ◽  
Environmental Turbulence ◽  
Configurational Approach ◽  
Governance Arrangements

This chapter belongs to the vein of research that analyses family firms from a configurational approach. This survey explores which combination of competitive strategy, environmental turbulence, family complexity, and family firm management and governance arrangements are present when firm performance is present. This research follows Le Breton-Miller and Miller's call to gain a better understanding of the interaction between competitive strategy, environmental conditions, and family firm features. Literature reports controversial results with regard to family-business strategic preferences and firm performance, and recent research shows that this relationship needs considering both industry and family context. This chapter analyses a sample of 129 Spanish SME-Family-Business that belong to the tourism industry. Using fuzzy-set qualitative comparative analysis, the authors find seven configurations to firm performance presence and one recipe for performance absence.

Influencing factors of construction professionals’ burnout in China: a sequential mixed-method approach

2020 ◽  
Vol 27 (10) ◽  
pp. 3215-3233
Author(s):  
Mouxuan Sun ◽  
Fangwei Zhu ◽  
Xiuxia Sun
Keyword(s):  
Influencing Factors ◽  
Mixed Method ◽  
Qualitative Comparative Analysis ◽  
Content Type ◽  
Mixed Method Approach ◽  
Emotional Demand ◽  
Configurational Approach ◽  
Quantitative Studies ◽  
Perceived Workload ◽  
Method Approach

PurposeThe present study investigated how different factors interact and work in concert to influence construction professionals’ burnout (hereafter CPs’ burnout) in China.Design/methodology/approachA sequential mixed-method approach was chosen for this research. Twenty-two interviews were conducted and analysed, and we identified ten influencing factors associated with CPs’ burnout. Subsequently, a sample of 232 questionnaires was analysed using fuzzy-set qualitative comparative analysis (fsQCA) to ascertain the eight configurations of CPs’ high and low burnout.FindingsThe key findings include the following: first, perceived workload, role ambiguity, role conflict, emotional demand, work-home interference, relationships with supervisors, autonomy, fairness of rewards, support from project team and self-efficacy are the ten factors influencing CPs’ burnout; second, experienced and less experienced construction professionals take different paths towards high or low burnout; and third, among construction professionals, perceived workload and burnout are not necessarily correlated. We found that autonomy plays a crucial role in this process.Originality/valueThis is one of the first studies to adopt a configurational approach for understanding influencing factors of CPs’ burnout. The strength of the present study is its sequential mixed-method approach, which forms a loop between the qualitative and quantitative studies.

Employee adaptive and proactive service recovery: a configurational perspective

2020 ◽  
Vol 54 (7) ◽  
pp. 1581-1607
Author(s):  
Graca Miranda Silva ◽  
Filipe Coelho ◽  
Cristiana R. Lages ◽  
Marta Reis
Keyword(s):  
Customer Service ◽  
Online Survey ◽  
Service Recovery ◽  
Qualitative Comparative Analysis ◽  
Adaptive Behaviors ◽  
Proactive Behavior ◽  
Frontline Employees ◽  
Content Type ◽  
Managerial Practices ◽  
Configurational Approach

Purpose This study aims to investigate the configurations that drive employee service recovery. Rather than analyzing the net effects of individual antecedents of service recovery, which is the common approach in the literature, this study uses a configurational approach to investigate how five antecedents (customer service orientation, rewards, teamwork, empowerment and customer service training) combine to yield employee adaptive and proactive service recovery behaviors. Design/methodology/approach The study collects responses from 90 frontline employees through an online survey. Building on configurational theory, the authors developed and empirically validated four research propositions by using a fuzzy-set qualitative comparative analysis. Findings Three equifinal configurations of managerial practices result in either employee proactive or adaptive service recovery behaviors. Two of these three configurations result in both adaptive and proactive behaviors. In addition, the findings show that two out of the three configurations that lead to proactive behavior in service recovery also lead to the simultaneous existence of proactive and adaptive behaviors in service recovery. None of the sufficient configurations require the presence of all managerial practices. These results underscore that managers do not have to act on every single managerial intervention area to promote service recovery. Research limitations/implications The study advances the knowledge on the antecedents of employee behavior in service recovery by investigating how these antecedents combine to yield different recipes for developing either employee adaptive or proactive behavior in service recovery. Practical implications The findings provide insights for managers into the different combinations of practices that can be used to develop employee proactive or adaptive behavior in service recovery. Originality/value To the best of the authors’ knowledge, this is the first study that relies on a configurational approach to understand the combinations of managerial practices that result in employee proactive and adaptive behaviors in service recovery.

Audit committee effectiveness and family firms: impact on performance

2019 ◽  
Vol 58 (6) ◽  
pp. 1021-1034
Author(s):  
Jihad Al-Okaily ◽  
Salma Naueihed
Keyword(s):  
Firm Performance ◽  
Fixed Effects ◽  
Audit Committee ◽  
Family Firms ◽  
Family Firm ◽  
Fixed Effects Model ◽  
Minority Shareholders ◽  
Content Type ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to empirically examine the relationship between audit committee characteristics and firm performance, and whether family ownership and involvement moderate the latter relationship. Design/methodology/approach Following Anderson and Reeb (2003), this paper estimates a two-way fixed effects model. A sub-sample analysis is used by first examining the impact of audit committee effectiveness on firm performance only in non-family firms and then only in family firms. A fully interacted model was also analyzed in the robustness tests. Findings This paper finds that the audit committee characteristics of size, expertise and meeting frequency are positively and significantly related to non-family firm performance, while insignificantly related to family firm performance. Research limitations/implications The evidence reported in this paper may be of use for regulators and policy makers pondering corporate governance reforms, as well as for investors, managers and minority shareholders concerned with firm performance and valuation. Originality/value To the best of the authors’ knowledge, this is the first study of its kind to examine the moderating effect of family control and involvement on the relationship between firm performance and audit committee effectiveness in terms of size, expertise and meeting frequency.

Family ownership and busy boards: impact on performance

2016 ◽  
Vol 54 (4) ◽  
pp. 832-853 ◽  
Author(s):  
Ellen Rouyer
Keyword(s):  
Family Firms ◽  
Cash Holdings ◽  
Family Ownership ◽  
Significant Finding ◽  
Content Type ◽  
Multiple Directorships ◽  
American Perspective ◽  
Tier System ◽  
International Data ◽  
To Come

Purpose – The purpose of this paper is to empirically assess the effect, if any, of family ownership and busy boards on companies’ Tobin’s Q and cash holdings in France. Design/methodology/approach – Using a multiple regression analysis for panel data, the author investigate the impacts of being family-owned and of multiple directorships on cash holdings and then on Tobin’s. Findings – Family ownership seems to have no significant effect. The most significant finding is that family-owned companies are smaller and work in the manufacturing and construction sectors compared to non-family-owned companies. However, multiple directorship is not negatively related to firm performance in France. Research limitations/implications – The current study focusses solely on France, which, even though different from the more usual American perspective, is not enough to make broad generalizations. It is however, a useful step toward better understanding the issues at hand. International data on family firms and busy boards, while hard to come by, would further enhance the knowledge of corporate governance. Originality/value – It is interesting to know if family-owned companies and those with multiple directorships perform differently from others, especially in a context where organizations can choose between a one-tier or two-tier system of governance, as is the case in France.

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