Commentary: The Servant, the Parasite, and the Enigma: A Tale of Three Ownership Structures and Their Affiliate Directors

2008 ◽  
Vol 32 (6) ◽  
pp. 1027-1033 ◽  
Author(s):  
James G. Combs
Keyword(s):  
Ownership Structure ◽  
Family Firms ◽  
Alternative Interpretation ◽  
Diversification Strategy ◽  
Public Firms ◽  
The Public ◽  
Ownership Structures ◽  
Professional Management ◽  
The Family ◽  
Dispersed Ownership

In private family firms, affiliate directors are largely resource–providing servants of the family. In nonfamily public firms with dispersed ownership, affiliates are, figuratively speaking, symbiotic parasites loyally supporting their professional management hosts while extracting revenues for their home firms. The public family firm stands somewhere between and the affiliate directors in such firms are consequently an enigma. Jones, Makri, and Gomez–Mejia compare affiliate directors in public family firms with those in public nonfamily firms and find that they positively influence diversification strategy only in public family firms. They interpret this outcome as evidence that affiliate directors in public family firms act like the servants found in private family firms. I offer an alternative interpretation by suggesting that affiliate directors in public family firms are more successful versions of their parasitic cousins in public nonfamily firms. I draw attention to the Janus–headed nature of these directors to underscore why it is useful to study public family firms as a distinct ownership structure.

scholarly journals OWNERSHIP STRUCTURES, INVESTORS CONFIDENCE AND FINANCIAL DECISIONS IN FAMILY FIRMS: EVIDENCE FROM GCC MARKETS

2018 ◽  
Vol 14 (1) ◽  
pp. 52-68
Author(s):  
Muhammad Sadiq Shahid ◽  
Keyword(s):  
Ownership Structure ◽  
Family Firms ◽  
Stock Exchange ◽  
Annual Reports ◽  
Stock Exchanges ◽  
Investment Funds ◽  
Financial Decisions ◽  
Ownership Structures ◽  
The Family ◽  
The Impact

The objective of this study is to examine the impact of financial decisions on the ownership structure. This study adopted two themes of ownership structure (e.g., 25% & 50%) that categorized the family-owned firms (FOF) and non-family firms (NFOF). The data was collected from 286 firms listed at GCC stock exchanges annual reports, stock exchange database, and Data Stream that range from 2010-2016 periods. The findings of this study showed that the FOFs have lesser investment-internal fund sensitivity than NFOFs. Though, there is an insignificant effect of the block holder on investment funds sensitivity. However, the little implication of dividend payout in FOFs as compare to NFOFs was disclosed in the results. Moreover, it wrapped up that there are less agency problems and information asymmetry in FOFs comparatively.

scholarly journals CSR reporting and ownership structure: Evidence from Italian listed companies

2020 ◽  
Vol 17 (3) ◽  
pp. 146-157 ◽  
Author(s):  
Fabio Fortuna ◽  
Mirella Ciaburri ◽  
Silvia Testarmata ◽  
Riccardo Tiscini
Keyword(s):  
Ownership Structure ◽  
Family Firms ◽  
Listed Firms ◽  
Ownership Structures ◽  
Csr Reporting ◽  
Concentrated Ownership ◽  
Csr Disclosure ◽  
Corporate Social ◽  
The Relationship ◽  
Dispersed Ownership

The paper empirically explores how firms’ Corporate Social Responsibility (CSR) disclosure varies according to their ownership structure. Three different kinds of ownership structures are considered: family firms (FFs), state-owned firms (SOFs) and firms with dispersed ownership (DOFs). It is the first study examining the relationship between CSR disclosure and ownership structure, which includes in the analysis also FFs and SOFs. The analysis is provided on a sample of 192 listed firms with reference to Italy, a suitable setting for the purpose of the study due to the considerable presence of both FFs and SOFs. Firstly, a content analysis on the CSR documents disclosed by the 192 firms is provided and then data are empirically analysed to test whether the ownership structure influences a firm’s CSR disclosure. Results show that FFs and SOFs disclose less CSR information and the explanation can be found in the lower level of agency problems they have to face. The paper contributes to the stream of literature about CSR disclosure, because it argues that the contents of CSR disclosure vary according to firm’s ownership structure and also to those about FFs and SOFs because it shows that the presence of a concentrated ownership lowers the level of CSR information disclosed.

Does family involvement matter post IPO? Adding value through advertising in family firms

2018 ◽  
Vol 8 (3) ◽  
pp. 218-234 ◽  
Author(s):  
Atanas Nik Nikolov ◽  
Yuan Wen
Keyword(s):  
Firm Performance ◽  
Family Involvement ◽  
Family Business ◽  
Family Firms ◽  
Family Firm ◽  
Family Businesses ◽  
Publicly Traded ◽  
Content Type ◽  
The Public ◽  
The Family

PurposeThis paper brings together research on advertising, family business, and the resource-based view (RBV) of the firm to examine performance differences between publicly traded US family vs non-family firms. The purpose of this paper is to understand the heterogeneity of family vs non-family firm advertising after such firms become publicly traded.Design/methodology/approachThe authors draw on the RBV of the firm, as well as on extensive empirical literature in family business and advertising research to empirically examine the differences between family and non-family firms in terms of performance.FindingsUsing panel data from over 2,000 companies across ten years, this research demonstrates that family businesses have higher advertising intensity than competitors, and achieve higher performance returns on their advertising investments, relative to non-family competitors. The results suggest that the “familiness” of public family firms is an intangible resource that, when combined with their advertising investments, affords family businesses a relative advantage compared to non-family businesses.Research limitations/implicationsFamily involvement in publicly traded firms may contribute toward a richer resource endowment and result in creating synergistic effects between firm “familiness” and the public status of the firm. The paper contributes toward the RBV of the firm and the advertising literature. Limitations include the lack of qualitative data to ground the findings and potential moderating effects.Practical implicationsUnderstanding how family firms’ advertising spending influences their consequent performance provides new information to family firms’ owners and management, as well as investors. The authors suggest that the “familiness” of public family firms may provide a significant advantage over their non-family-owned competitors.Social implicationsThe implications for society include that the family firm as an organizational form does not need to be relegated to a second-class citizen status in the business world: indeed, combining family firms’ characteristics within a publicly traded platform may provide firm performance benefits which benefit the founding family and other stakeholders.Originality/valueThis study contributes by highlighting the important influence of family involvement on advertising investment in the public family firm, a topic which has received limited attention. Second, it also integrates public ownership in family firms with the family involvement–advertising–firm performance relationship. As such, it uncovers a new pathway through which the family effect is leveraged to increase firm performance. Third, this study also contributes to the advertising and resource building literatures by identifying advertising as an additional resource which magnifies the impact of the bundle of resources available to the public family firm. Fourth, the use of an extensive panel data set allows for a more complex empirical investigation of the inherently dynamic relationships in the data and thus provides a contribution to the empirical stream of research in family business.

Is family ownership of a firm associated with the control of managerial discretion and corporate decisions?

2016 ◽  
Vol 6 (1) ◽  
Author(s):  
Jennifer Martinez Ferrero ◽  
Lázaro Rodríguez-Ariza ◽  
Manuel Bermejo-Sánchez
Keyword(s):  
Ownership Structure ◽  
Design Methodology ◽  
Family Firms ◽  
Managerial Discretion ◽  
Family Ownership ◽  
Managerial Decisions ◽  
Corporate Decisions ◽  
Type Design ◽  
The Family ◽  
The Impact

Purpose This paper considers the association between family firms and managerial discretion, hypothesising that a higher degree of family ownership may decrease the conflict of interest between owners and managers, thus avoiding the risk of discretionary actions by the latter. Design/methodology/approach Our empirical analysis is based on a large sample of international listed companies from 20 countries including the Special Administrative Region of Hong Kong and covers the period 2002–2010. Methodologically, we use a logit model with marginal effects on the panel data. Findings Our analysis shows that family ownership is associated with greater control and monitoring of managerial decisions, thus avoiding information asymmetries and, therefore, the risk of discretionary actions. In other words, family owners impose a stronger discipline and dissuade non-family managers from using managerial discretion to act in their own interest. Finally, we clarify the inconclusive results reported previously about the effects of family ownership on discretionary practices. Originality/value Our paper contributes to the family firm literature by providing evidence of the impact of ownership structure on the level of discretionay practices. Furthermore, we explore the differences between family and non-family firms as each group has its own varied characteristics. Moreover, in contrast to most previous studies, which have focused on only one country, we extend the analysis to include an international sample of 20 countries. This leads to potentially more powerful and generalizable results.

scholarly journals Family firms control structure and corporate sustainability

2015 ◽  
Vol 13 (1) ◽  
pp. 1088-1100
Author(s):  
Hsiang-Tsai Chiang ◽  
Fang-Chun Liu
Keyword(s):  
Family Firms ◽  
Control Structure ◽  
Corporate Sustainability ◽  
Internal Degree ◽  
Single Family ◽  
Positive Relation ◽  
The Public ◽  
The Family ◽  
The Board Of Directors ◽  
A Company

A company with CSR devotion reflects this company aims not only in making profit, but also in sustainability. Family-owned companies have possessed of both control and operation right of the company, and family will devote themselves in CSR to signal the company’s commitment and then gains good image in order to sustainable and to maximize family benefit, The result indicated a positive relation between sustainability and the percentage of control shareholding, and negative relations between sustainability and two kinds of characteristic of family firms, which are the internal degree of the Board of Directors and the firm directed by single family. The evidence can offer stakeholders or the public to judge or predict the future development of the family firm.

scholarly journals A study on Taiwanese corporate social responsibility and ownership structures

2012 ◽  
Vol 9 (3) ◽  
pp. 111-122 ◽  
Author(s):  
Shihwei Wu ◽  
Fengyi Lin ◽  
Chiaming Wu
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Information Asymmetry ◽  
Ownership Structure ◽  
Family Firms ◽  
Earnings Quality ◽  
Ownership Structures ◽  
Professional Managers ◽  
Corporate Social ◽  
The Relationship

This study develops several models to examine the relationship between the corporate social responsibility (CSR) and the ownership structure of Taiwanese firms. Our results suggest that firms which are controlled by professional managers, government-owned, or collectively-owned would like to undertake serious efforts to integrate the CSR into various aspects of their companies. Due to Asia firm’s culture, family firms might be more reluctant to put efforts on CSR activities. We also report that there is a positive relationship between (a) the CSR and financial performance and (b) the CSR and earnings quality. This study suggests that the ownership structures are found to have effects on the CSR and the CSR could also decrease the information asymmetry between managers and investors.

Client Acceptance and Engagement Pricing following Auditor Resignations in Family Firms

2016 ◽  
Vol 35 (4) ◽  
pp. 137-158 ◽  
Author(s):  
Samer Khalil ◽  
Mohamad Mazboudi
Keyword(s):  
Ownership Structure ◽  
Family Firms ◽  
Audit Fees ◽  
Audit Pricing ◽  
Pricing Decisions ◽  
Big 4 ◽  
Professional Manager ◽  
Financial Restatements ◽  
The Family ◽  
Client Acceptance

SUMMARY This paper investigates whether auditors' client acceptance and pricing decisions following the resignation of the incumbent auditor in family firms are significantly different from those in non-family firms. Relying on the auditing literature (client acceptance and audit pricing) and using insights from the agency theory, we document that successor auditors incorporate a firm's ownership structure into their acceptance and pricing decisions following the resignation of the incumbent auditor. Big 4 auditors are more likely to serve as successor auditors following auditor resignations in family firms as opposed to non-family firms. The changes in audit fees following auditor resignations in family firms, however, are significantly smaller than those in non-family firms. These results hold when we account for whether a family firm is managed by a founder, a descendant, or by a professional manager, and when we use the percentage of shares held by the family members as another proxy for family ownership. Additional analysis further demonstrates that the likelihood of financial restatements in family firms in the post-resignation period are significantly lower than those in non-family firms. Overall, our findings suggest that Big 4 auditors perceive family firms from which the incumbent auditors resigned as being less risky than their non-family counterparts.

Ownership and Operating Performance of Spanish Family IPO Firms

2020 ◽  
pp. 210-233
Author(s):  
Fuencisla Martínez Lobato ◽  
C. José García Martín ◽  
José Emilio Farinós Viñas
Keyword(s):  
Empirical Evidence ◽  
Initial Public Offering ◽  
Ownership Structure ◽  
Family Firms ◽  
Operating Performance ◽  
Operational Performance ◽  
The Family ◽  
Spanish Family ◽  
Public Offering ◽  
A Company

Previous studies have shown the existence of a relationship between the ownership structure of a company and its operational performance. In this context, the empirical evidence reveals that after an initial public offering (IPO), companies experience a decline in their operational performance. In this research, the authors investigate whether the characteristics of Spanish family firms led to a different operating behavior with respect to non-family companies when they go public through an IPO. The results show that the particularities of the family firm do not turn into significant differences in operational performance after the listing process.

scholarly journals Principal-Principal Conflicts and Socioemotional Wealth in Family Firms

2017 ◽  
Vol 9 (10) ◽  
pp. 128 ◽  
Author(s):  
Jason See Toh Seong Kuan ◽  
Chin Fei Goh ◽  
Owee Kowang Tan ◽  
Norliza Mohd Salleh
Keyword(s):  
Corporate Governance ◽  
Family Firms ◽  
Family Firm ◽  
The Public ◽  
The Family ◽  
Different Types ◽  
Governance Practice ◽  
Corporate Governance Practice ◽  
The Relationship

Corporate governance is the concern of all the parties throughout the world regarding their viability in order to ensure the sustainability of the firm. As the family firms are listed in the public exchange, there are different kind of the investors in the corporation produce the resolution that are opposing to each other. Moreover, the large capital that is injected by the institutional investor complicates the role played in the corporation that shapes the culture and philanthropy. The phenomenon leads to the complex relationship in one corporation due to the different types of interest. Board composition and board independence are stretched by numerous scholars regarding the core importance in the corporation. Executive compensation is another area of corporate governance that is widely discussed by the scholars regarding the relationship with the long-term firm performance. Therefore, this review paper will focus on the application of the Principal-principal Conflicts theory and Socio-Emotional Wealth theory to narrate the whole scenario of the governance practice in the family firm. Throughout the paper, current rigorous practice of the family firms will be deeply investigated to cover the deep insights of the current phenomenon. The meticulous review of this paper is able to synthesize the significance of these theories towards the general governance setting in the family firms. Eventually, the working paradigm of the family firm can be clearly justified with the rationale that is justified. At the end of the review, the two main theories are concluded to be equally essential to illustrate the corporate governance practice in family firms across the globe.

A New England Gentleman: Theodore Lyman III, 1833–1897

1983 ◽  
Vol 17 (3) ◽  
pp. 367-390
Author(s):  
P. A. M. Taylor
Keyword(s):  
New England ◽  
Family Firms ◽  
Industrial Revolution ◽  
Massachusetts General Hospital ◽  
City Government ◽  
Upper Class ◽  
Small Bodies ◽  
The Public ◽  
The Family ◽  
The Masses

Few small bodies of men have been more carefully studied, in recent years, than Boston's upper class. Winning their first fortunes in overseas trade, then transferring their capital to textiles and railroads, that class laid the foundations of America's Industrial Revolution as well as extending its own wealth and power. From such an economic base, so modern scholars assure us, they consolidated their class through marriage, through placing their sons in family firms or in the learned professions, and through guaranteeing the continuity of their fortunes, against incompetence or the claims of creditors and daughters' husbands, by the device of the family trust. They reached out to control or create institutions, whether Harvard, the Boston Athenaeum, or Massachusetts General Hospital. They played an important part in city government. In addition, it is alleged, they sought to control the masses through charities and the public school system. If all this characterized the first half of the nineteenth century, modern scholars assure us that in the second half atrophy set in as the city's growth slowed, as investments became more conservative, as political power was lost, as defensiveness and imitation replaced creativity. It must be added that some observers in those days, inside and outside the class, took the same view.Many of the facts are beyond dispute. Hugh M. Blaisdell, the self-made businessman in Robert Grant's novel The Chippendales, was correct in saying that Boston “hasn't a first-class fortune,” though many in the second class.

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