Family Ownership and Control, the Presence of Other Large Shareholders, and Firm Performance: Further Evidence

2011 ◽  
Vol 24 (1) ◽  
pp. 71-93 ◽  
Author(s):  
María Sacristán-Navarro ◽  
Silvia Gómez-Ansón ◽  
Laura Cabeza-García
Keyword(s):  
Firm Performance ◽  
Family Firms ◽  
Family Ownership ◽  
Family Control ◽  
Large Shareholders ◽  
And Control ◽  
Unobservable Heterogeneity

This article analyzes, using various econometric techniques, how family ownership, family control, and the presence of a second significant shareholder affect firm performance. The authors studied a panel of 118 nonfinancial Spanish companies (711 observations) from 2002 to 2008. Once endogeneity issues were considered, it was found that family ownership did not influence profitability. What seems to matter is family control. This study also reveals the importance of taking into account unobservable heterogeneity and endogeneity issues when analyzing firm performance and provides an interesting future avenue of research: the role played by other large shareholders in family firms.

scholarly journals Does family control reduce firm risk?

2015 ◽  
Vol 5 (1) ◽  
Author(s):  
Jose Luis Miralles-Marcelo ◽  
María del Mar Miralles-Quirós ◽  
Ines Lisboa
Keyword(s):  
Family Firms ◽  
Family Influence ◽  
Family Ownership ◽  
Firm Risk ◽  
Growth Opportunities ◽  
Family Control ◽  
The Family ◽  
Current Context ◽  
And Control ◽  
New Evidence

In the current context of instability and financial crisis, understanding firm risk is crucial. In this study we aim to assess firm risk differences between family and non-family firms. Furthermore we analyze the family control impact, measured by both the family ownership and the F-PEC scale, in firm risk. We provide new evidence from family firm studies since we not only analyze the risk topic, almost unexplored, but we also introduce the F-PEC scale, an alternative way to measure the family influence. Using Portuguese quoted firms during the 1999- 2012 period, we find that family influence and control do not impact firm risk. Moreover, the firm size, return and growth opportunities influence it. 

The Influence of Family Ownership on Long-Lived Asset Write-Offs

2015 ◽  
Vol 28 (4) ◽  
pp. 355-371 ◽  
Author(s):  
Giulio Greco ◽  
Silvia Ferramosca ◽  
Marco Allegrini
Keyword(s):  
Firm Performance ◽  
Earnings Management ◽  
Agency Theory ◽  
Family Firms ◽  
Family Ownership ◽  
Agency Conflicts ◽  
Asset Value

Building on agency theory, this article investigates whether family firms’ accounting behavior regarding long-lived asset write-offs differs from that of nonfamily firms. We provide evidence that nonfamily firms use write-offs for earnings management purposes, while family firms report write-offs coherent with the firm performance. Family firms experience dwindling sales and lower profitability in the years following the write-offs, consistently with an effective decline in their assets value. The findings are consistent with reduced owner-manager agency conflicts in family firms. We find no indication of family entrenchment, which is consistent with family owners being concerned with the reputational damage associated with a loss of a firm’s asset value.

Family firms, family generation and performance: evidence from an emerging economy

2014 ◽  
Vol 4 (2) ◽  
pp. 197-219 ◽  
Author(s):  
Mohammad Badrul Muttakin ◽  
Arifur Khan ◽  
Nava Subramaniam
Keyword(s):  
Firm Performance ◽  
Family Firms ◽  
Emerging Market ◽  
Emerging Economy ◽  
Family Ownership ◽  
Content Type ◽  
Generation Family ◽  
And Performance ◽  
The Impact ◽  
Better Than

Purpose – The purpose of this paper is to examine the impact of family ownership on firm performance. In particular the authors investigate whether family firms outperform non-family firms and whether first generation family firms perform better than second generation family firms in an emerging economy using Bangladesh as a case. Design/methodology/approach – This study uses a data set of 141 listed Bangladeshi non-financial companies for the period 2005-2009. The methodology is based on multivariate regression analysis. Findings – The result shows that family firms perform better than their non-family counterparts. The authors also find that family ownership has a positive impact on firm performance. The analysis further reveals intergenerational differences where family firms and performance are associated positively only when founder members act as CEOs or chairmen. However, when descendents serve as CEOs or chairmen family firms are associated with poorer firm performance. Originality/value – The authors extend the findings of previous studies that investigate the family ownership and firm performance relationship in developed economy settings, but neglected emerging economies. The study also informs the literature about the intergenerational impact of family firms on performance in an emerging market.

Family Ownership and Firm Performance: Evidence From Public Companies in Chile

2007 ◽  
Vol 20 (2) ◽  
pp. 83-94 ◽  
Author(s):  
Jon I. Martínez ◽  
Bernhard S. Stöhr ◽  
Bernardo F. Quiroga
Keyword(s):  
Firm Performance ◽  
Regression Model ◽  
Conceptual Framework ◽  
Family Firms ◽  
Multiple Regression Model ◽  
Family Ownership ◽  
Public Companies ◽  
The Impact ◽  
Measures Of Performance ◽  
Better Than

We studied the impact of family ownership on firm performance by using a set of data on Chilean firms. From a sample of 175 firms listed on the stock market, the group of 100 family-controlled firms performed significantly better than the group of 75 nonfamily companies over the 10-year period under study (1995—2004). Three distinct measures of performance—ROA, ROE, and a proxy of Tobin's Q—were employed to test the differences of means between the two groups of firms. These results were in line with our multiple regression model. All these findings support our conceptual framework and hypothesis, which states that public family firms perform better than public nonfamily firms.

scholarly journals How is firm performance related to family ownership in Malaysia and does board independence moderate the relationship?

2015 ◽  
Vol 11 (2) ◽  
pp. 21-35 ◽  
Author(s):  
Sin-Huei Ng ◽  
Tze San Ong ◽  
Boon Heng Teh ◽  
Wei Ni Soh
Keyword(s):  
Firm Performance ◽  
Agency Theory ◽  
Family Ownership ◽  
Board Independence ◽  
Moderating Effects ◽  
Dominant Party ◽  
The Family ◽  
And Control ◽  
Relationship Of ◽  
The Relationship

This paper explores whether the performance of publicly-listed family-controlled firms in Malaysia is related to the extent of the families’ ownership. It also explores whether there are any moderating effects from the various attributes of board independence on the ownership-performance relationship of these firms. The findings indicate that increasing families’ ownership is related to better firm performance under the condition that the families do not have absolute ownership and control over their firms. However, giving more control via majority ownership that causes the families to become the only dominant party might enhance their ability to expropriate and cause firm performance to deteriorate. Therefore, proposal to increase ownership as a mean to reduce the classical agency-theory problems should be caveated under the principal-principal perspective. It is also found that the various board independence attributes do not exhibit any moderating influence on the family ownership-firm performance relationship. This finding may indicate the powerlessness of the boards of director in Malaysia when encountered with the influential controlling families whom the directorship tenures and opportunities of the non-family directors depend on. Decisions made by the controlling families which have bearing on firm performance may not have been effectively counter checked by the boards due to the lack of truly independent nature of the boards

scholarly journals Earnings Quality, Family Influence and Corporate Governance: Empirical Evidence from Malaysia

2021 ◽  
Author(s):  
◽  
Wan Adibah Binti Wan Ismail
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Audit Committee ◽  
Family Firms ◽  
Earnings Quality ◽  
Governance Structure ◽  
Family Influence ◽  
Family Ownership ◽  
The Board Of Directors ◽  
And Control

<p>This study investigates whether family ownership and control, and corporate governance are associated with earnings quality, and whether family influence in firms weakens the association between corporate governance and earnings quality. This study uses a panel sample of 527 publicly traded firms over the period 2003-2008 from the Malaysia Stock Exchange (Bursa Malaysia). Identifying family firms as firms in which family members hold a significant portion of shares and possess control over the board of directors, this study finds that family firms have significantly higher earnings quality. The results remain unchanged, even after using alternative measures of earnings quality and family influence. This study also finds that the earnings quality of firms in Malaysia is positively associated with the size and independence of the audit committee and negatively associated with the size of the board of directors. However, these relationships exist only for nonfamily firms. These results on the corporate governance variables suggest that the effectiveness of corporate governance could be mediated by family influence. Using multivariate regressions that include interaction variables for corporate governance and family firms, the study finds that the relationship between corporate governance and earnings quality is mediated by family ownership and control. The result is consistent with the argument that the monitoring role of corporate governance reduces when there is substantial control by family owners in a firm. Overall, this study concludes that family ownership and control drives higher quality earnings for firms regardless of their corporate governance structure.</p>

scholarly journals Agency costs, corporate governance mechanisms and performance of public listed family firms in Malaysia

2011 ◽  
Vol 42 (3) ◽  
pp. 17-26 ◽  
Author(s):  
H. Ibrahim ◽  
F. A. Samad
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Firm Value ◽  
Agency Costs ◽  
Family Firms ◽  
Family Ownership ◽  
Governance Mechanisms ◽  
Corporate Governance Mechanisms ◽  
Utilization Ratio ◽  
And Performance

We compare corporate governance and performance between family and non-family ownership of public listed companies in Malaysia from 1999 through 2005 measured by Tobin’s Q and ROA. We also examine the governance mechanisms as a tool in monitoring agency costs based on asset utilization ratio and expense ratio as proxy for agency costs. We find that on average firm value is lower in family firms than non-family firms, while board size, independent director and duality have a significant impact on firm performance in family firms as compared to non-family firms. We also find that these governance mechanisms have significant impact on agency costs for both family and non-family firms.

Do family CEOs benefit investment efficiency when they face uncertainty?

2017 ◽  
Vol 11 (2) ◽  
pp. 248-269 ◽  
Author(s):  
Weiwei Gao ◽  
Wanli Li ◽  
Zhen Huang
Keyword(s):  
Ownership Structure ◽  
Family Firms ◽  
Generation Effect ◽  
Chinese Family ◽  
Family Ownership ◽  
Investment Efficiency ◽  
Content Type ◽  
Family Control ◽  
Large Shareholder ◽  
Shareholder Structure

Purpose This paper aims to investigate whether family CEOs benefit investment efficiency under uncertainty with Chinese family firms and to test the moderating effect of ownership structure, including family ownership, the separation of family control from family ownership and the multiple large shareholder structure. Design/methodology/approach Fixed-effects models are designed for a sample of 5,734 firm-year observations for Chinese family firms from 2009 to 2014. Findings The results show that investment efficiency is low under uncertainty, and having family CEOs can reduce this negative relationship. Further analysis reveals that for firms with family CEOs, the negative effect of uncertainty on investment efficiency is weaker when the family has higher ownership, when family control is less separated from family ownership, or when family firms have multiple large shareholder structures. Research limitations/implications The authors do not distinguish founder-CEOs and descendant-CEOs. Most of Chinese family firms are still managed by founders, so the authors cannot explore the generation effect although different generations manage firms differently. Because family succession is becoming a more and more important problem in China, further research may be able to explore the generation effect. Practical/implications This paper suggests that in emerging economies with weak investor protection, outside minority shareholders can avoid expropriation from family owners by investing in firms with large family ownership, little separation of family control from ownership or multiple large shareholder structure. In addition, policymakers can encourage institutional investors to participate in family business to improve corporate governance. Originality/value Drawing on both Type I and Type II agency theory perspectives, the authors argue that although family CEOs can generally benefit firms’ investment efficiency, the benefits vary with firms’ ownership structure. In other words, family CEOs are not absolute agents or stewards but some extent of combination of both.

scholarly journals Earnings Quality, Family Influence and Corporate Governance: Empirical Evidence from Malaysia

2021 ◽  
Author(s):  
◽  
Wan Adibah Binti Wan Ismail
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Audit Committee ◽  
Family Firms ◽  
Earnings Quality ◽  
Governance Structure ◽  
Family Influence ◽  
Family Ownership ◽  
The Board Of Directors ◽  
And Control

<p>This study investigates whether family ownership and control, and corporate governance are associated with earnings quality, and whether family influence in firms weakens the association between corporate governance and earnings quality. This study uses a panel sample of 527 publicly traded firms over the period 2003-2008 from the Malaysia Stock Exchange (Bursa Malaysia). Identifying family firms as firms in which family members hold a significant portion of shares and possess control over the board of directors, this study finds that family firms have significantly higher earnings quality. The results remain unchanged, even after using alternative measures of earnings quality and family influence. This study also finds that the earnings quality of firms in Malaysia is positively associated with the size and independence of the audit committee and negatively associated with the size of the board of directors. However, these relationships exist only for nonfamily firms. These results on the corporate governance variables suggest that the effectiveness of corporate governance could be mediated by family influence. Using multivariate regressions that include interaction variables for corporate governance and family firms, the study finds that the relationship between corporate governance and earnings quality is mediated by family ownership and control. The result is consistent with the argument that the monitoring role of corporate governance reduces when there is substantial control by family owners in a firm. Overall, this study concludes that family ownership and control drives higher quality earnings for firms regardless of their corporate governance structure.</p>

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