Family Firms in the Ownership Network: Clustering, Bridging, and Embeddedness

2018 ◽  
Vol 43 (2) ◽  
pp. 330-351 ◽  
Author(s):  
Dalhia Mani ◽  
Rodolphe Durand
Keyword(s):  
Family Involvement ◽  
Community Involvement ◽  
Family Firms ◽  
Analytical Framework ◽  
Network Clustering ◽  
Corporate Ownership ◽  
Group Affiliation ◽  
Listed Firms ◽  
Business Group Affiliation ◽  
Longitudinal Dataset

In this article, we investigate family firms' position in the intercorporate ownership network. Rooting our predictions in the Behavioral Agency Model and a Network analytical framework, we predict and find that family involvement decreases the likelihood of business group affiliation and of cross-group ties leading to a lower embeddedness within the overall network. We predict and find the opposite effect for community involvement. We use the complete longitudinal dataset of publicly listed firms' corporate ownership ties in India (2001, 2005, and 2009). Theoretical and substantive contributions are to research on family businesses and to research on interorganizational networks.

scholarly journals Extract Or Not Extract? The Effect of Familism on Stock Option Plans

2016 ◽  
Vol 11 (5) ◽  
pp. 82 ◽  
Author(s):  
Claudia Arena ◽  
Simona Catuogno ◽  
Alessandro Cirillo ◽  
Luca Pennacchio
Keyword(s):  
Family Involvement ◽  
Family Firms ◽  
Stock Option ◽  
Policy Implications ◽  
Minority Shareholders ◽  
Rent Extraction ◽  
Strike Price ◽  
Listed Firms ◽  
Market Index ◽  
Managerial Positions

<p>There is an ongoing debate in managerial literature regarding the aim of stock option plans (SOPs). In this paper we analyse whether and to what extent the family involvement in ownership and managerial positions affects the use of SOPs as tools to extract rents. By examining a sample of plans issued by Italian listed firms, we classify the SOPs according to their characteristics (i.e. vesting period, lock-up, strike price, market index) and identify three different clusters namely Rent SOPs, Non-Rent SOPs, Hybrid. After controlling for CEO family, board size, equity owned by minority shareholders, and other firm-specific characteristics, we find that family firms are less likely to adopt SOPs for rent extraction purpose. We also find that SOPs specifically granted to family members are less likely to pursue rent extraction goals. Our findings are robust against different specifications of family firms. This paper offers important theoretical contributions to management research and insightful policy implications for all family owned listed firms.</p>

scholarly journals Does family involvement on board of the directors contribute to firm profitability? An empirical evidence from Saudi Arabia

2015 ◽  
Vol 11 (2) ◽  
pp. 159-170 ◽  
Author(s):  
Shehabaddin Abdullah A. Al-Dubai ◽  
Ku Nor Izah Ku Ismail ◽  
Noor Afza Amran
Keyword(s):  
Time Series ◽  
Saudi Arabia ◽  
Empirical Evidence ◽  
Family Involvement ◽  
Family Firms ◽  
Cross Sectional ◽  
Listed Firms ◽  
Firm Profitability ◽  
The World ◽  
Promising Area

Literatures view board of the directors as the cornerstone of firm’s success. Therefore, family involvement on the board and its impact on firm profitability is an issue of interest and need to be addressed. The purpose of this paper lies in the fact that it extracts new empirical evidence from a promising area in the world. The study proceeds with a cross-sectional time-series analysis based on a data of 75 Saudi non-financial public listed firms from 2007-2011(375 firm-year observations) to examine family representing on board of the directors, family chairman, and founder chairman and its impact on firm performance (ROA). The study concludes the outperformance of firms in which family represents heavily on the board. In addition, the results suggest that not all family members are good stewards. Strictly speaking, founder chairman only found to be beneficial to the firm profitability rather than others. However, the results confirmed its robustness against different indicator (EPS) and when family firms only being selected.

scholarly journals Do family firms pay less for external funding?

2021 ◽  
pp. 031289622110182
Author(s):  
Muhammad Jahangir Ali ◽  
Seema Miglani ◽  
Man Dang ◽  
Premkanth Puwanenthiren ◽  
Mazur Mieszko
Keyword(s):  
Family Involvement ◽  
Family Firms ◽  
Jel Classification ◽  
Family Control ◽  
Listed Firms ◽  
Family Enterprises ◽  
The Cost ◽  
And Control ◽  
The Impact

We examine the impact of family control on the cost of raising external funds by family enterprises. Using a sample of Australian publicly listed firms, we find a significantly negative relation between cost of newly raised capital and family control. Moreover, we show that this relationship varies with the quality of corporate governance and the quality of firm’s information environment. Furthermore, we conduct several robustness checks and consistently find that our main results remain unchanged. Overall, our evidence suggests that family firms have easier access to external financing fostered by family involvement in the ownership and control. JEL Classification: G31; G32; M41; M42

scholarly journals The influence of family board involvement on earnings management

2021 ◽  
Vol 18 (2) ◽  
pp. 106-123
Author(s):  
Fabio Franzoi ◽  
Mark Mietzner ◽  
Franziska Thelemann
Keyword(s):  
Earnings Management ◽  
Family Involvement ◽  
Family Firms ◽  
Management Practices ◽  
Real Earnings Management ◽  
Family Management ◽  
Family Ownership ◽  
Executive Board ◽  
Listed Firms ◽  
Founding Family

This study explores the influence of family ownership and family board involvement on earnings management in German-listed firms. We extend existing research by applying a more precise measurement of family involvement that offers new insights into a family’s effect on earnings management behaviour. Our models suggest that the degree of management involvement of families is a significant driver of earnings management, a factor disregarded so far in the literature. Furthermore, the distinction between founding family and family ownership should be carefully considered. Employing a sample of 278 firms from 2000-2013, we find that greater family management presence on the executive board is associated with more earnings-decreasing accrual-based earnings management practices and more real earnings management activities via discretionary expenses. This is viewed as less value-destroying REM activity to meet earning targets. Overall, German family firms seem to use their powerful positions as shareholders and executive board members to expropriate shareholders and manage earnings to meet targets while maintaining family wealth

scholarly journals Diversified, integrated and cross-border acquisitions and firm performance: A comparison of family and non-family Italian listed firms

2018 ◽  
Vol 16 (1) ◽  
pp. 72-86 ◽  
Author(s):  
Fabio La Rosa ◽  
Francesca Bernini ◽  
Giovanna Mariani
Keyword(s):  
Family Involvement ◽  
Family Firms ◽  
Global Financial Crisis ◽  
Target Selection ◽  
Family Ownership ◽  
Listed Firms ◽  
And Performance ◽  
The Global Financial Crisis ◽  
External Growth

In family firms, the principal-agent relationship and the steward role of family managers are determinants for external growth and acquisition target selection. In fact, some acquisitions are better for the family’s need for risk reduction and company preservation. We aim to verify if family involvement in ownership and management influences firms’ acquisition propensity, type of strategy, and post-deal performance. We develop an empirical analysis for a sample of 141 Italian listed companies during 2005–2011, which includes the global financial crisis. Our results reveal that Italian listed family firms have lower acquisition propensity than non-family firms because of family involvement in ownership and executive committees. Especially, diversifying strategies are less pursued by family firms, and this is corroborated when family ownership increases. However, while family firms do not differ from non-family firms on post-acquisition performance, a moderating role of family firms and family ownership does exist for diversified acquisitions and performance.

scholarly journals Earning quality in listed firms: How much an active family governance is desirable?

2012 ◽  
Vol 10 (1) ◽  
pp. 681-691 ◽  
Author(s):  
Riccardo Tiscini ◽  
Francesca di Donato
Keyword(s):  
Family Involvement ◽  
Family Firms ◽  
Earnings Quality ◽  
Listed Firms ◽  
Family Governance ◽  
The Family ◽  
Governance Practices ◽  
Earning Quality ◽  
Italian Context ◽  
The Relationship

The study investigates the relationship between family involvement in the governance of Italian listed companies and earnings quality (EQ). Family firms set incentives to extract private benefits (‘entrenchment’ effect), but, they also contribute to higher alignment between owners and managers (‘alignment’ effect). The literature shows mixed results about the relationship between EQ and family firms. We argue that family involvement in the governance affects EQ. The empirical evidence shows that in the Italian context, there is higher EQ in case of higher family involvement in the board, but only if the CEO is not belonging to the controlling family. On the contrary, in case of a family CEO, the higher family involvement in the board increases his entrenchment, reducing EQ. The results are valuable because we find that EQ in family firms is affected both by family ownership and by the attitude of the family toward governance practices.

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 The persistence of family firms: How does performance threshold affect family firm exit?

2021 ◽  
Author(s):  
Noni Symeonidou ◽  
Dawn R. DeTienne ◽  
Francesco Chirico
Keyword(s):  
Family Firms ◽  
English Summary ◽  
Future Generations ◽  
Family Influence ◽  
Firm Exit ◽  
Lower Performance ◽  
Threshold Theory ◽  
Exit Decisions ◽  
Future Work ◽  
Longitudinal Dataset

AbstractResearch on family firms provides mixed evidence of the effect of family ownership on firm performance and exit outcomes. Drawing on threshold theory and the socioemotional wealth perspective, we argue that family firms have lower performance thresholds than non-family firms, reducing the likelihood of firm exit. Using a longitudinal dataset of 1191 firms over the period 2008–2011, we find support for this contention, suggesting that performance threshold is an important, yet poorly studied, construct for understanding exits of family versus non-family firms.Plain English Summary Why firms with similar economic performance make different exit decisions? We find evidence that family firms have lower “performance thresholds” than non-family firms, reducing family firms’ likelihood of exit. Using a longitudinal dataset, we examine differences in performance threshold between family and non-family firms and help clarify why some firms persist with their ventures even though their performance may indicate they should exit the market. Our theory and related findings suggest that nonfinancial attributes such as identity, the ability to exercise family influence, and to hand the business down to future generations may affect family firms’ attitudes toward exit decisions. Our study contributes to sharpening our understanding of exit in family firms while motivating future work on exit strategies in family firms and other contexts.

scholarly journals The Determinants of Tax Aggressiveness in Family Firms: An Investigation of Italian Private Family Firms

2021 ◽  
Vol 13 (14) ◽  
pp. 7654
Author(s):  
Giulia Flamini ◽  
Paola Vola ◽  
Lucrezia Songini ◽  
Luca Gnan
Keyword(s):  
Family Involvement ◽  
Family Business ◽  
Family Firms ◽  
Tax Planning ◽  
Agency Conflicts ◽  
Managerial Control ◽  
Public Companies ◽  
Tax Aggressiveness ◽  
Research Findings ◽  
Antecedents And Consequences

A recent stream of research has focused on tax aggressiveness, the downward management of taxable income through tax planning activities, and has analyzed its antecedents and consequences, mainly on public companies. Only very few studies, however, have been carried out in the context of private family business and have investigated whether some family firms are more tax aggressive than others, considering some specific features of family firms, such as their distinctive agency conflicts and socioemotional wealth. In this paper, we investigate the antecedents of tax aggressiveness in a sample of private Italian family firms. Our research findings show that tax aggressiveness is positively associated with ownership concentration, the presence of independent members in the board, and the adoption of reporting mechanisms. Instead, we found a negative relation between tax aggressiveness and the use of both strategic planning and a combination of managerial control systems (both planning and reporting mechanisms). We did not find any relation between family CEO and tax aggressiveness. In summary, overall, our findings show that family involvement in ownership, an independent board. and managerialization (the use of managerial mechanisms) are relevant antecedents of tax aggressiveness in private family businesses.

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