Founder Teams and Firm Value in Young Public Firms: An Analysis of the Moderating Effect of Founders’ Ownership Power and Team Size

PurposeThis paper examines the relationship between the number of domestic banks that the firm engages with and firm value and how this relationship is moderated by ownership concentration at low and very high level on a sample of Malaysian family and non-family firms.Design/methodology/approachFor hypotheses testing, panel data analysis using the fixed effects model (FEM) is used because the FEM can address any endogeneity problems effectively (Chi, 2005). The panel data regression is conducted on both family firms and non-family firms.FindingsWe find that there is a significant negative relationship between the number of domestic banks engaged by family firms, operating in industries where these firms do not have absolute monopoly, and firm value. However, there is no evidence that this significant negative firm value effect is stronger in family firms compared to non-family firms. Furthermore, the significant positive moderating effect of ownership concentration on this relationship within family firms in such industries is evident only at low level of ownership concentration. Interestingly, at very high level of ownership concentration, this significant positive moderating effect becomes negative. There is no evidence that these significant moderating effects are stronger in family firms compared to non-family firms.Research limitations/implicationsThis research has focused only on family and non-family firms.Practical implicationsAn implication of this research is that there is a need for the capital market regulators to introduce appropriate policies to deter family firms from having a close relationship with domestic banks as well as monitor the number of domestic banks engaged by such firms. There may be policy implications for consideration by the Central Bank of Malaysia as well.Originality/valueThis research provides some insights to both academia and industry regarding the consequences of domestic banking relationship and different levels of concentrated ownership in family firms in an emerging market. These insights can help improve the corporate governance as well as ownership structure of Malaysian public-listed family firms which dominate the capital market. Our findings refute the argument by Peng and Jiang (2010) by demonstrating that corporate reputational effects may be a substitute for institutional deficiencies.

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The moderating effect of corporate governance on the relationship between related party transactions and firm value

Afro-Asian J of Finance and Accounting ◽

10.1504/aajfa.2017.10006167 ◽

2017 ◽

Vol 7 (3) ◽

pp. 201

Author(s):

Maryam Farhadi ◽

Masood Fooladi

Keyword(s):

Corporate Governance ◽

Firm Value ◽

Moderating Effect ◽

Related Party Transactions ◽

The Relationship

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Exploring the moderating effect of family CEO on the association between family ownership and firm value: An empirical analysis of top Indian family firms

Corporate Ownership and Control ◽

10.22495/cocv12i2c3p1 ◽

2015 ◽

Vol 12 (2) ◽

pp. 349-361

Author(s):

Lakshmi Kalyanaraman

Keyword(s):

Family Member ◽

Empirical Analysis ◽

Interaction Effect ◽

Firm Value ◽

Family Firms ◽

Stock Exchange ◽

Moderating Effect ◽

Market Valuation ◽

Family Ownership ◽

The Relationship

We study 288 family firms included in the NSE CNX 500 index of the National Stock Exchange of India. We find an entrenchment-alignment-entrenchment relationship between family ownership and firm value. We show that family CEO has a negative moderating effect on the relationship between family ownership and firm value. When the interaction effect of Family CEO on family ownership is controlled, only family shareholding in the alignment range is found to be statistically significant. The study shows that family firms with family CEO suffer from a decrease in market valuation. This finding is extremely valuable given the fact that India is dominated by family firms and majority of family firms appoint a family member as CEO

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Risk disclosures and firm value: the role of governance in an emerging market

International Journal of Productivity and Performance Management ◽

10.1108/ijppm-09-2020-0476 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Surbhi Jain ◽

Mehul Raithatha

Keyword(s):

Firm Value ◽

Good Governance ◽

Negative Impact ◽

Emerging Market ◽

Moderating Effect ◽

Least Square ◽

Governance Mechanism ◽

Content Type ◽

Risk Disclosures ◽

The Impact

PurposeThe objective of this paper is to investigate the impact of risk disclosures on firm value. We further investigate whether effective governance moderates the relation between risk disclosures and firm value.Design/methodology/approachWe use a sample of the top 200 Indian listed firms on NSE from 2013 to 2018. The generalised method of moments (GMM) along with the ordinary least square (OLS) is used to investigate our research problem. Further, we use the Propensity Score Matching (PSM) technique and the Heckman selection model for correcting selection bias in the robustness section.FindingsWe find that higher risk disclosures result in lower firm value. Besides, we show that better governance minimizes the negative impact of risk disclosures on firm value. This finding encourages firms to have a good governance mechanism to mitigate the adverse effects of risk disclosures in public.Originality/valueThe main contribution of our paper is to examine the moderating effect of governance between risk disclosures in the annual report and firm value (market-based and accounting-based) in the context of an emerging economy. Moreover, the paper highlights the potential moderating effect of independent directors and resourceful boards on the risk disclosures and firm value in the Indian context.

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