Family CEOs vs. Nonfamily CEOs in the Family-Controlled Firm: An Examination of the Level and Sensitivity of Pay to Performance

2000 ◽  
Vol 13 (2) ◽  
pp. 121-131 ◽  
Author(s):  
Daniel L. McConaughy
Keyword(s):  
Firm Value ◽  
Ceo Compensation ◽  
Family Firms ◽  
Multivariate Analyses ◽  
Incentive Alignment ◽  
Founding Family ◽  
The Family

This study examines CEO compensation in 82 founding-family-controlled firms; 47 CEOs are members of the founding family and 35 are not. It tests the family incentive alignment hypothesis, which predicts that family CEOs have superior incentives for maximizing firm value and, therefore, need fewer compensation-based incentives. Univariate and multivariate analyses show that family CEOs' compensation levels are lower and that they receive less incentive-based pay—confirming the family incentive alignment hypothesis and suggesting the possible need for family firms to increase CEO compensation when they replace a founding family CEO with a nonfamily-member CEO.

The effects of goals attainment on CEO-owner satisfaction and the role of family involvement

2019 ◽  
Vol 10 (2) ◽  
pp. 116-127
Author(s):  
Ondřej Machek ◽  
Jiří Hnilica
Keyword(s):  
Family Involvement ◽  
Family Business ◽  
Firm Value ◽  
Family Firms ◽  
Hierarchical Regression ◽  
Content Type ◽  
Business Goals ◽  
Growth Increase ◽  
The Family ◽  
Owner Satisfaction

Purpose The purpose of this paper is to examine how the satisfaction with economic and non-economic goals achievement is related to the overall satisfaction with the business of the CEO-owner, and whether family involvement moderates this relationship. Design/methodology/approach Based on a survey among 323 CEO-owners of family and non-family businesses operating in the Czech Republic, the authors employ the OLS hierarchical regression analysis and test the moderating effects of family involvement on the relationship between the satisfaction with different goals attainment and the overall satisfaction with the business. Findings The main finding is that family and non-family CEO-owner’s satisfaction does not differ significantly when economic goals (profit maximisation, sales growth, increase in market share or firm value) and firm-oriented non-economic goals (satisfaction of employees, corporate reputation) are being achieved; both classes of goals increase the overall satisfaction with the firm and the family involvement does not strengthen this relationship. However, when it comes to external non-economic goals related to the society or environment, there is a significant and positive moderating effect of family involvement. Originality/value The study contributes to the family business literature. First, to date, most of the studies focused on family business goals have been qualitative, thus not allowing for generalisation of findings. Second, there is a lack of evidence on the ways in which family firms integrate their financial and non-financial goals. Third, the authors contribute to the literature on the determinants of personal satisfaction with the business for CEOs, which has been the focus on a relatively scarce number of studies.

scholarly journals Concentración de propiedad y valor de mercado en la empresa familiar : un enfoque de gobierno corporativo

2013 ◽  
pp. 111 ◽  
Author(s):  
Julio Pindado ◽  
Ignacio Requejo ◽  
Chabela De la Torre
Keyword(s):  
Firm Value ◽  
Family Firms ◽  
Generalized Method Of Moments ◽  
Ownership Concentration ◽  
Family Ownership ◽  
Minority Shareholders ◽  
Family Control ◽  
The Family ◽  
Nonlinear Relation ◽  
Better Than

Dada la importancia de las empresas familiares en todo el mundo, nuestro principal objetivo en este trabajo es investigar la relación entre concentración de propiedad y valor de mercado en elcaso particular de las compañías familiares. Además, estudiamos si las empresas familiares obtienen mejores resultados que las no familiares. Para lograr este objetivo, adoptamos un enfoque de gobierno corporativo. La estimación de nuestros modelos mediante el método generalizado de los momentos proporciona nueva evidencia empírica. Nuestros resultados revelan que la propiedad familiar influye positivamente en el valor empresarial. No obstante, cuando laconcentración de propiedad en manos de la familia es demasiado elevada, el valor de la compañía disminuye; dando lugar a un relación no lineal entre concentración de propiedad familiar y valor de mercado. Finalmente, demostramos que las empresas familiares obtienen mejores resultados que las no familiares, incluso cuando se tiene en cuenta la mencionada no linealidad. En general, losresultados obtenidos indican que el control familiar de las empresas puede ser beneficioso para los accionistas minoritarios.<br /><br />Given the importance of family firms all over the world, our main objective in this paper is to investigate the relation between ownership concentration and the market value of the company inthe particular case of family firms. Additionally, we study whether family firms outperform nonfamily corporations. To this aim, we adopt a corporate governance approach. The estimation of ourmodels by using the generalized method of moments provides new empirical evidence. Our results show that family ownership impacts positively on firm value. Nevertheless, when ownership concentration in the hands of the family is too high, firm value decreases; thus giving rise to a nonlinear relation between family ownership concentration and firm value. Finally, we find that familyfirms perform better than non-family ones, even when nonlinearities are taken into account. Overall, our findings suggest that family control of corporations may be beneficial to minority shareholders.

scholarly journals Do family CEOs impact firm value? An empirical analysis of Indian family firms

2016 ◽  
Vol 11 (1) ◽  
pp. 59-70 ◽  
Author(s):  
Lakshmi Kalyanaraman
Keyword(s):  
Financial Services ◽  
Firm Value ◽  
Family Firms ◽  
Private Companies ◽  
Services Sector ◽  
The Family ◽  
Research Findings ◽  
Relationship Of ◽  
The Relationship ◽  
Majority Shareholder

We study the association between family CEO and firm value on a sample of 288 family firms during the 6-year period, from 2009 to 2014. The sample is drawn from domestic private companies belonging to non-financial services sector included in the NSE CNX 500 index. We find that family CEO has no significant association with firm value, when the family is not the majority shareholder. Family shareholding has positive relationship with firm value, but does not moderate the relationship of family CEO with firm value. We show that family CEO and firm value are negatively related when the family does not hold majority equity stake in the family firm. While family shareholding has no significant relationship with firm value, it has a negative interaction effect on the relationship between family CEO and firm value. The research findings have important implications for family firms as well as the nonfamily investors in the family firms.

scholarly journals Concentración de propiedad y valor de mercado en la empresa familiar : un enfoque de gobierno corporativo

2013 ◽  
pp. 111
Author(s):  
Julio Pindado ◽  
Ignacio Requejo ◽  
Chabela De la Torre
Keyword(s):  
Firm Value ◽  
Family Firms ◽  
Generalized Method Of Moments ◽  
Ownership Concentration ◽  
Family Ownership ◽  
Minority Shareholders ◽  
Family Control ◽  
The Family ◽  
Nonlinear Relation ◽  
Better Than

Dada la importancia de las empresas familiares en todo el mundo, nuestro principal objetivo en este trabajo es investigar la relación entre concentración de propiedad y valor de mercado en elcaso particular de las compañías familiares. Además, estudiamos si las empresas familiares obtienen mejores resultados que las no familiares. Para lograr este objetivo, adoptamos un enfoque de gobierno corporativo. La estimación de nuestros modelos mediante el método generalizado de los momentos proporciona nueva evidencia empírica. Nuestros resultados revelan que la propiedad familiar influye positivamente en el valor empresarial. No obstante, cuando laconcentración de propiedad en manos de la familia es demasiado elevada, el valor de la compañía disminuye; dando lugar a un relación no lineal entre concentración de propiedad familiar y valor de mercado. Finalmente, demostramos que las empresas familiares obtienen mejores resultados que las no familiares, incluso cuando se tiene en cuenta la mencionada no linealidad. En general, losresultados obtenidos indican que el control familiar de las empresas puede ser beneficioso para los accionistas minoritarios.<br /><br />Given the importance of family firms all over the world, our main objective in this paper is to investigate the relation between ownership concentration and the market value of the company inthe particular case of family firms. Additionally, we study whether family firms outperform nonfamily corporations. To this aim, we adopt a corporate governance approach. The estimation of ourmodels by using the generalized method of moments provides new empirical evidence. Our results show that family ownership impacts positively on firm value. Nevertheless, when ownership concentration in the hands of the family is too high, firm value decreases; thus giving rise to a nonlinear relation between family ownership concentration and firm value. Finally, we find that familyfirms perform better than non-family ones, even when nonlinearities are taken into account. Overall, our findings suggest that family control of corporations may be beneficial to minority shareholders.

scholarly journals Peran Struktur Dewan Dalam Mempengaruhi Kinerja Pada Nilai Perusahaan Keluarga

2018 ◽  
Vol 2 (1) ◽  
pp. 45-53
Author(s):  
Santi Yopie ◽  
Supriyanto Supriyanto ◽  
Budi Chandra
Keyword(s):  
Firm Value ◽  
Family Firms ◽  
Negative Influence ◽  
Positive Influence ◽  
Board Structure ◽  
Corporate Value ◽  
Professional Qualification ◽  
Family Enterprise ◽  
The Family ◽  
Significant Positive Influence

The family company is synonymous with the characteristics to inherit its company from one generation to the next. The average family company can only survive and inherit up to third generation (Wahjono, Wajoedi, & Idrus, S, 2014). However, there are also have some family companies especially in the field of estate in Scotland that can last up to 400, 600 even 800 years (Belmonte, Seaman, & Bent, 2016). The culture and application of the board structure of each family company varies greatly. The purpose of this study was to determine the effect of board structure (CEO family / non-family, professional qualification, board size, and independent commissioner) on the value of the company in the family enterprise. This research method is analyzed by multiple linear regression on panel data that is 125 family company in BEI 2010-2014. The results of this study indicate that family firms run by non-family (professional) CEOs will be higher in corporate value than the family CEO. Professional qualifications have a significant negative influence on the value of the company. The size of the board has a significant positive influence on firm value. Independent commissioners have no significant influence on the value of family firms.

Family Firms, Social Responsibility, and Non-Family Member Employees Identification

Think India ◽  
2013 ◽  
Vol 16 (3) ◽  
pp. 10-19
Author(s):  
Ang Bao
Keyword(s):  
Resource Allocation ◽  
Social Responsibility ◽  
Family Member ◽  
Program Implementation ◽  
Social Identity Theory ◽  
Family Firms ◽  
The Family ◽  
Corporate Social ◽  
The Relationship ◽  
Csr Engagement

The objective of this paper is to find the relationship between family firms’ CSR engagement and their non-family member employees’ organisational identification. Drawing upon the existing literature on social identity theory, corporate social responsibility and family firms, the author proposes that family firms engage actively in CSR programs in a balanced manner to increase non-family member employees’ organisational identification. The findings of the research suggest that by developing and implementing balanced CSR programs, and actively getting engaged in CSR activities, family firms may help their non-family member employees better identify themselves with the firms. The article points out that due to unbalanced CSR resource allocation, family firms face the problem of inefficient CSR program implementation, and are suggested to switch alternatively to an improved scheme. Family firms may be advised to take corresponding steps to select right employees, communicate better with non-family member employees, use resources better and handle firms’ succession problems efficiently. The paper extends employees’ identification and CSR research into the family firm research domain and points out some drawbacks in family firms’ CSR resource allocation while formerly were seldom noticed.

Making gender visible in family business: past and present

2012 ◽  
Vol 13 (1) ◽  
Author(s):  
Paloma Fernández Pérez ◽  
Eleanor Hamilton
Keyword(s):  
Family Business ◽  
Family Firms ◽  
Business Leadership ◽  
Legal Rules ◽  
Developed Economies ◽  
The Family ◽  
Interdisciplinary Synthesis ◽  
Complex Forms ◽  
Rules Of The Game

This  study  contributes  to  developing  our understanding of gender and family business. It draws on studies from the business history and management literatures and provides an interdisciplinary synthesis. It illuminates the role of women and their participation in the entrepreneurial practices of the family and the business. Leadership is introduced as a concept to examine the roles of women and men in family firms, arguing that concepts used  by  historians or economists like ownership and management have served to make women ‘invisible’, at least in western developed economies in which owners and managers have been historically due to legal rules  of  the  game  men,  and  minoritarily women. Finally, it explores gender relations and  the  notion  that  leadership  in  family business  may  take  complex  forms  crafte within constantly changing relationships.

CEO Deal-Making Activity, CEO Compensation and Firm Value

2010 ◽  
Author(s):  
Eliezer M. Fich ◽  
Laura T. Starks ◽  
Adam S. Yore
Keyword(s):  
Firm Value ◽  
Ceo Compensation ◽  
Deal Making

Corporate cash holdings and their implications on firm value in family and founder firms

2012 ◽  
Vol 9 (2) ◽  
pp. 257-273 ◽  
Author(s):  
James Lau ◽  
Joern H. Block
Keyword(s):  
Adverse Selection ◽  
Interaction Effect ◽  
Firm Value ◽  
Family Firms ◽  
Cash Holdings ◽  
Agency Cost ◽  
Economic Incentives ◽  
Positive Interaction ◽  
Superior Knowledge ◽  
Corporate Cash Holdings

This research investigates whether the presence of controlling founders and families has significant impact on the level of cash holdings, and their implications on firm value. The agency cost of cash holdings in founder firms is arguably less severe than family firms, due to founders’ economic incentives, strong psychological commitment and superior knowledge, whereas family firms are exposed to adverse selection and moral hazard as a result of altruism. Results indicate that founder firms hold a significantly higher level of cash holdings than family firms. In addition, there is a positive interaction effect between founder management and cash holdings on firm value, suggesting the presence of founders as managers helps to mitigate the agency costs of cash holdings.

Founding Family Ownership and the Selection of Industry Specialist Auditors

2014 ◽  
Vol 28 (2) ◽  
pp. 261-276 ◽  
Author(s):  
Fei Kang
Keyword(s):  
Financial Reporting ◽  
Family Firms ◽  
Structure And Agency ◽  
Founding Family ◽  
Using Data ◽  
Dual Class Shares ◽  
Dual Class ◽  
Selection Of ◽  
Industry Specialist

SYNOPSIS This study examines how family firms' unique ownership structure and agency problems affect their selection of industry-specialist auditors. Using data from Standard & Poor's (S&P) 1500 firms, the results show that family firms are more likely to appoint industry-specialist auditors than non-family firms, which suggests that family firms have strong incentives to signal the quality of financial reporting. Additional analysis indicates that due to the potential entrenchment problems, family firms with family member CEOs or with dual-class shares have even a higher tendency to hire industry-specialist auditors to signal their disclosure quality.

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