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 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.

Family control, agency conflicts, corporate cash holdings and firm value

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ruchi Moolchandani ◽  
Sujata Kar
Keyword(s):  
Firm Value ◽  
Family Firms ◽  
Cash Holdings ◽  
Minority Shareholders ◽  
Content Type ◽  
Family Control ◽  
Indian Family ◽  
Agency Conflict ◽  
Cash Reserves ◽  
Corporate Cash Holdings

PurposeThis paper examines whether family control exerts any influence on corporate cash holdings in Indian listed firms. It also examines how this accumulated cash of family firms impacts firm value.Design/methodology/approachThe study uses dynamic panel data regression estimated using two-step system generalized method of moments (GMM) on S&P BSE 500 firms during 2009–2018 for testing the repercussions of family control on the cash levels of a firm. Further, fixed effects regression has been employed for the valuation analysis.FindingsEstimation results showed that family control negatively impacts cash holdings in Indian firms. Further, the cash accumulation by family firms adversely affects the market valuation of the firm. These findings signal a principal–principal (P-P) agency conflict in Indian family firms, i.e. friction between family owners and minority shareholders' interests. Minority shareholders fear that a part of the cash reserves will be used by family members for personal benefits. Thus, they discount cash reserves in family firms.Originality/valueThe study adds to the determinants of corporate cash holdings in emerging markets. To the best of the authors’ knowledge, this is the first study from India investigating family control as a determinant of cash policy. It sheds light on the P-P agency conflict in Indian family firms. P-P agency conflict is less researched in cash holdings literature as opposed to the principal–agent managerial disputes. Also, the study uses a more comprehensive definition of family control rather than just considering the ownership as used in prior cash holding research.

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 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.

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.

scholarly journals Family Control And The Value Of Cash Holdings

2015 ◽  
Vol 31 (2) ◽  
pp. 647 ◽  
Author(s):  
Sabri Boubaker ◽  
Imen Derouiche ◽  
Majdi Hassen
Keyword(s):  
Firm Value ◽  
Family Firms ◽  
Cash Holdings ◽  
Firm Resources ◽  
Family Control ◽  
Large Sample ◽  
Listed Firms ◽  
Excess Cash ◽  
Cash Reserves ◽  
Corporate Cash Holdings

The present study investigates the effects of family control on the value of corporate cash holdings. Using a large sample of French listed firms, the results show that the value of excess cash reserves is lower in family firms than in other firms, reflecting investors concern about the potential misuse of cash by controlling families. We also find that the value of excess cash is lower when controlling families are involved in management and when they maintain a grip on control, indicating that investors do not expect the efficient use of cash in these firms. Our findings are consistent with the argument that the extent to which excess cash contributes to firm value is lower when dominant shareholders are likely to expropriate firm resources. Overall, family control seems to be a key determinant of cash valuation when ownership is concentrated.

Family Firms and the Choice Between Wholly Owned Subsidiaries and Joint Ventures: A Transaction Costs Perspective

2018 ◽  
Vol 44 (2) ◽  
pp. 211-232 ◽  
Author(s):  
Maria Cristina Sestu ◽  
Antonio Majocchi
Keyword(s):  
Transaction Costs ◽  
Family Involvement ◽  
Family Firms ◽  
Joint Venture ◽  
Entry Modes ◽  
Family Control ◽  
The Family ◽  
Wholly Owned Subsidiary ◽  
Transaction Costs Economics

We examine the effects of family control on entry mode choice by integrating Transaction Costs Economics with the family business literature. Using a dataset of 951 foreign investments, we investigate the role of family involvement on entry modes. After controlling for endogeneity, we find that if both the investing and the local firm are family firms, forming a joint venture is preferred, while if only the investing firm is a family firm, a wholly owned subsidiary is more likely. Results show that family control has an important impact on entry modes, an hypothesis that has not yet been fully explored.

Technological Innovation in Family Firms

2020 ◽  
pp. 168-190
Author(s):  
Mario Ossorio
Keyword(s):  
Technological Innovation ◽  
Family Firms ◽  
Innovation Management ◽  
Innovation Process ◽  
Family Ownership ◽  
The Third ◽  
The Family ◽  
Innovation Output ◽  
Innovation Strategies ◽  
External Actors

This chapter illustrates the main issues with respect to innovation process within family firms. In the first part, it describes the main theories underlying the innovation process of family firms (agency theory, altruism, portfolio theory, stewardship theory, socioemotional wealth perspective). In the second part, it exposes the R&D underinvestment problem in large companies with a focus on the effect of the family ownership on the R&D investments. In the third part, it describes the effect of family ownership on the innovation output with a focus on the kind of innovation (radical vs. incremental). In the fourth section, studies exploring the innovation strategies of family firms (prospectors, analysers, defenders, reactors) are examined. In the fifth section, it sheds light on the innovation management process of family firms. In this part, it explores the issues of internal innovation process (functional vs. cross-functional structure) and of the partnerships with external actors aimed to generate innovation.

scholarly journals Family firms, banks and firm value: Evidence from Malaysia

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Chee Yoong Liew ◽  
S. Susela Devi
Keyword(s):  
Panel Data ◽  
Capital Market ◽  
Firm Value ◽  
Family Firms ◽  
Moderating Effect ◽  
Ownership Concentration ◽  
Content Type ◽  
Domestic Banks ◽  
High Level ◽  
Very High

PurposeThis paper examines the relationship between the number of domestic banks that the firm engages with and firm value and how this relationship is moderated by ownership concentration at low and very high level on a sample of Malaysian family and non-family firms.Design/methodology/approachFor hypotheses testing, panel data analysis using the fixed effects model (FEM) is used because the FEM can address any endogeneity problems effectively (Chi, 2005). The panel data regression is conducted on both family firms and non-family firms.FindingsWe find that there is a significant negative relationship between the number of domestic banks engaged by family firms, operating in industries where these firms do not have absolute monopoly, and firm value. However, there is no evidence that this significant negative firm value effect is stronger in family firms compared to non-family firms. Furthermore, the significant positive moderating effect of ownership concentration on this relationship within family firms in such industries is evident only at low level of ownership concentration. Interestingly, at very high level of ownership concentration, this significant positive moderating effect becomes negative. There is no evidence that these significant moderating effects are stronger in family firms compared to non-family firms.Research limitations/implicationsThis research has focused only on family and non-family firms.Practical implicationsAn implication of this research is that there is a need for the capital market regulators to introduce appropriate policies to deter family firms from having a close relationship with domestic banks as well as monitor the number of domestic banks engaged by such firms. There may be policy implications for consideration by the Central Bank of Malaysia as well.Originality/valueThis research provides some insights to both academia and industry regarding the consequences of domestic banking relationship and different levels of concentrated ownership in family firms in an emerging market. These insights can help improve the corporate governance as well as ownership structure of Malaysian public-listed family firms which dominate the capital market. Our findings refute the argument by Peng and Jiang (2010) by demonstrating that corporate reputational effects may be a substitute for institutional deficiencies.

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.

Sign in / Sign up

Export Citation Format

Share Document