The Impact of Incentive Compensation on Labor Productivity in Family and Nonfamily Firms

2017 ◽  
Vol 30 (2) ◽  
pp. 119-136 ◽  
Author(s):  
James J. Chrisman ◽  
Srikant Devaraj ◽  
Pankaj C. Patel
Keyword(s):  
Labor Market ◽  
Human Resource ◽  
Adverse Selection ◽  
Labor Productivity ◽  
Family Firms ◽  
Incentive Compensation ◽  
Selection Problems ◽  
The Family ◽  
Matched Data ◽  
The Impact

Family and nonfamily firms both must align owner and employee interests. However, family firms may experience lower labor productivity because of adverse selection problems from labor market sorting and attenuation. Incentive compensation reduces alignment of interest problems in family and nonfamily firms. Importantly, incentive compensation signals to potential employees that performance will be rewarded, which should improve the relative labor productivity in family firms by reducing adverse selection. Analysis of matched data on 216,768 firms supports our hypotheses, implying that incentive compensation has a broader impact on firm performance than commonly recognized in the family firm or human resource literatures.

Better with age: financial reporting quality in family firms

2019 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Roberto Tommasetti ◽  
Marcelo Á. da Silva Macedo ◽  
Frederico A. Azevedo de Carvalho ◽  
Sergio Barile
Keyword(s):  
Financial Reporting ◽  
Family Firms ◽  
Reporting Quality ◽  
Management Control ◽  
Financial Reporting Quality ◽  
Content Type ◽  
Family Control ◽  
A Value ◽  
The Family ◽  
The Impact

Purpose The purpose of this paper is to contribute to the literature on financial reporting quality (FRQ) within family firms (FFs), assessing whether longevity can determine a different propensity to earning management (EM) behaviors. Design/methodology/approach The sample, composed by Italian and Brazilian listed family (and non-family) firms, is segregated into old and young. For each subsample, unsigned discretionary accruals are calculated, using two different EM models. A linear regression model is then proposed, together with some robustness tests, to confirm the research hypothesis. Findings The outcome is that, within FFs, the entrenchment effect seems to be diminishing with the company’s age, up to become lower than the alignment effect. With some caveat, research also demonstrates that old FFs are more propense to supply higher FRQ than any other subsample group. Research limitations/implications The authors demonstrated that, in terms of EM decision process, FFs become virtuous just with time. More research is needed to evaluate the impact of the share and management control separately and to analyze different generation segmentation. Practical implications This paper could help non-family stakeholders, as it shows that different company types (family vs non-family), at a different stage of the life-cycle (young vs old) have a different attitude toward FRQ. On the other hand, family owners could exploit the longevity as a value driver. Originality/value This paper suggests that agency theory and socio-emotional theory are complementary in explaining the family control role in earnings management decisions. The study also contributes to the debate of FF homogeneity and on risk behavior in FFs, often portrayed as having a patient capital.

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 An Investigation Of Family Culture In Family Firms’ Performance In Retailer-Vendor Strategic Partnerships

2021 ◽  
Author(s):  
Leonardo Amado Godoy
Keyword(s):  
Family Business ◽  
Positive Relationship ◽  
Family Firms ◽  
Strategic Partnerships ◽  
Family Culture ◽  
The Family ◽  
Relationship Value ◽  
And Performance ◽  
The Impact ◽  
Group Family

This research proposes a model to measure the effect of family culture on firm performance in family business retailer-vendor strategic partnerships. Prior research that has contributed to the development of the discourse on family culture, organizational culture, family and relationship value, commitment, and trust will be analyzed. Eight hypotheses are presented, four of which are an extension of prior research. The model ratifies a positive relationship between family culture and performance, especially when considering the successor generation. Since the founders of the firm are the personification of the family culture itself, for this group, family culture does not positively influence performance. The outcome of this research will illustrate not only the effects of family culture in family firms’ performance, but also the impact of relationship and behavioral factors in business.

scholarly journals Family Businesses And Corporate Social Responsibility (CSR) Orientation: A Study Of Moroccan Family Firms

2014 ◽  
Vol 30 (3) ◽  
pp. 671 ◽  
Author(s):  
Jamal Elbaz ◽  
Issam Laguir
Keyword(s):  
Family Structure ◽  
Financial Performance ◽  
Family Firms ◽  
Exploratory Research ◽  
Legitimacy Theory ◽  
The Family ◽  
Moroccan Family ◽  
Corporate Social ◽  
The Impact ◽  
Csr Orientation

<p>Several researchers have reported that family firms tend to show a CSR orientation in their activities which might increase their performance (Chrisman et al., 2005; O'Boyle et al., 2010).</p> <p>In Morocco, many studies have focused on the integration of CSR principles into businesses without highlighting the impact of family structure on the adoption of CSR. Therefore, the objective of this study was to determine whether the family structure of Moroccan companies influences CSR adoption and how it affects financial performance. We used a framework combining stakeholder theory, legitimacy theory and stewardship theory and investigated the linkage between family structure, CSR orientation and financial performance. Our results show that family structure positively influences the CSR orientation of Moroccan family firms and thus enhances their financial performance. Although this trend is recent in Morocco, our exploratory research on CSR in Moroccan family firms is a first step toward establishing a model to explain this phenomenon in developing countries.</p>

Analisis Polisi Luput Pelan Takaful Keluarga

2018 ◽  
Vol 15 (1) ◽  
pp. 84-95
Author(s):  
Rubayah Yaakob ◽  
Mohd Hafizuddin Syah Baangan Abdullah ◽  
Norasykeen Mohd Baharom
Keyword(s):  
Adverse Selection ◽  
Negative Impact ◽  
Demographic Characteristics ◽  
Policy Makers ◽  
Financial Pressure ◽  
The Family ◽  
Insured Individual ◽  
Huge Impact ◽  
And Gender ◽  
The Impact

This study aims to analyze the determinants of policy lapse of family’s takaful in Malaysia by examining the demographic characteristics of policyholders and the family takaful policy itself. The policy could lapse due to several reasons such as failing to make payment within the prescribed period, converting to a better policy, financial pressure and voluntary surrender. The policy lapse has a huge impact on stakeholders such as takaful operators, customers and policy makers. The impact of policy lapse includes losses to firms, adverse selection, liquidity and contribution increament. The results of the logistic regression analysis show that the sum insured, payment methods and gender have a negative impact on policy lapse. Wheares age, marital status and the insured individual have no effect on policy lapse. The findings assist stakeholders such as takaful operators and regulators to develop appropriate strategies to achieve their goals and support the development of the takaful industry in Malaysia.

The Impact of Adolescent Work in Family Business on Child–Parent Relationships and Psychological Well-Being

2017 ◽  
Vol 30 (3) ◽  
pp. 242-261 ◽  
Author(s):  
Marjan Houshmand ◽  
Marc-David L. Seidel ◽  
Dennis G. Ma
Keyword(s):  
Family Firms ◽  
Well Being ◽  
Work Experiences ◽  
Parental Relationships ◽  
Psychological Well Being ◽  
Quality Work ◽  
Family Outcomes ◽  
The Family ◽  
Weighted Regression Analysis ◽  
The Impact

Previous ecological theory of human development research shows mixed results concerning the impact of adolescent work on psychological and family outcomes. We show the consequences of working in the family firm on adolescents’ parental relationships, self-esteem, and depression, highlighting the importance of high-quality work experiences in the early life course. Weighted regression analysis of longitudinal data from Statistics Canada’s National Longitudinal Survey of Children and Youth shows that those adolescents who work in their family firms on a year-round basis report a better relationship with their parents, and better psychological well-being than their nonfamily firm working counterparts.

The Impact of Family Ownership and Involvement on the Process of Management Succession

1993 ◽  
Vol 6 (1) ◽  
pp. 31-54 ◽  
Author(s):  
Johannes H. M. Welsch
Keyword(s):  
Human Resources ◽  
Human Resource ◽  
Family Business ◽  
Family Firms ◽  
Family Ownership ◽  
Industrial Firms ◽  
Exploratory Investigation ◽  
Depth Analysis ◽  
Management Succession ◽  
The Impact

The exploratory investigation on which this article builds seeks to link the field of family business with the field of human resource management. The research asks the question, Are family firms less rational, less bureaucratic, and more political in the management of their human resources? An in-depth analysis of the process of management succession in more than two hundred industrial firms shows the differences to be very subtle.

scholarly journals GHG Emissions Mitigation in the European Union Based on Labor Market Changes

Energies ◽  
2021 ◽  
Vol 14 (2) ◽  
pp. 465
Author(s):  
Mihaela Simionescu ◽  
Yuriy Bilan ◽  
Piotr Zawadzki ◽  
Adam Wojciechowski ◽  
Marcin Rabe
Keyword(s):  
Labor Market ◽  
Labor Productivity ◽  
Ghg Emissions ◽  
Developed Countries ◽  
Working Time ◽  
Actual Problem ◽  
Member States ◽  
Emissions Mitigation ◽  
The Impact ◽  
The Eu

The effects of the labor market on environmental issues are an actual problem at the global level, and recommendations are required to achieve equilibrium between labor productivity and environmental protection. Considering the ecological limits of work and the necessity of reducing the working time to mitigate GHG (greenhouse gas) emissions, this paper aims to assess the impact of the labor market on GHG emissions in the EU-28 countries. Using panel data models for 2007–2019, a positive effect of working time for employed persons on GHG emissions was detected. Labor productivity has a positive impact on emissions for most of the developed countries in the EU (old member states), while the effect is negative in the case of most of the new member states, which suggests that more efforts should be made by old member states to correlate labor productivity with a sustainable level of GHG emissions. As a novelty for research in the field, we assessed also the effect of targeted labor utilization on GHG emissions in order to describe the context of a sustainable economy that is an objective for each country in the EU. These results suggest that progress in GHG emissions mitigation might be achieved by reducing the working time for employed persons, which will also improve well-being. These recommendations could be useful also for other developed countries outside the EU that encounter the same difficulties.

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 Family Business and Financial Performance: What are the Effects of Tax Cut Policy on Them in Uzbekistan?

2020 ◽  
Vol 6 (4) ◽  
pp. 27-45
Author(s):  
Yusupov Jasurbek ◽  
Sakata Kei
Keyword(s):  
Financial Performance ◽  
Family Business ◽  
Family Firms ◽  
The Family ◽  
The Difference ◽  
The Impact ◽  
The Relationship ◽  
Unbalanced Panel Data ◽  
Business Study

This study is the first comprehensive empirical study to examine the relationship between the family business and the firm’s performance in Uzbekistan. In this research, we investigate the relationship between family firms and financial performance using enough extensive unbalanced panel data from 2012 through 2015 on 3148 non-banking/non-government firms. Moreover, we analyze the impact of tax cut policy on SMEs, including family firms from a case study of Uzbekistan by using the difference-in-difference estimator. These two will be a major contribution to the family business study field in Uzbekistan.

Sign in / Sign up

Export Citation Format

Share Document