scholarly journals Corporate governance mechanisms in family firms – A socioemotional wealth perspective

2018 ◽  
Vol 15 (3) ◽  
pp. 32-46
Author(s):  
Patrick Ulrich ◽  
Alexandra Fibitz
Keyword(s):  
Corporate Governance ◽  
Statistical Analysis ◽  
Empirical Study ◽  
Family Firms ◽  
Theory And Practice ◽  
Family Influence ◽  
Governance Mechanisms ◽  
Socioemotional Wealth ◽  
Long Run ◽  
Corporate Governance Mechanisms

This paper examines how German family firms differ in the usage of corporate governance mechanisms in comparison to non-family firms. We give an overview about the relation of corporate governance and family firms, and deliver hypotheses from an empirical study. The study was conducted in 2017 as a written survey and 86 questionnaires could be used for statistical analysis. Based on socioemotional wealth (SEW) theory, we find that with a higher extent of family influence in the firm, less corporate governance instruments are used. Furthermore, corporate governance is used primarily to prevent stakeholder confidence in the long-run. However, a formalization of corporate governance mechanisms does not take place. We draw implications for more corporate governance formalization and awareness in family firms both for theory and practice.

scholarly journals Practices and mechanisms to mitigate the negative effects of accountingbased earnings management: An empirical study from the professionals’ perspective

2021 ◽  
Vol 8 (9) ◽  
pp. 15-28
Author(s):  
Monteiro et al. ◽  
Keyword(s):  
Corporate Governance ◽  
Empirical Study ◽  
Earnings Management ◽  
Theory And Practice ◽  
Professional Experience ◽  
Governance Mechanisms ◽  
Corporate Governance Mechanisms ◽  
The Relationship ◽  
And Training ◽  
Training Area

Accounting conservatism and Accounting-based Earnings Management Practices (AEMP) introduce bias in financial information (FI), thereby influencing stakeholder behavior in the decision-making process. This study aims to analyze, from the certified accountants’ perspective, the AEMP in Portugal. Specifically, it analyses (1) the development of the AEMP and its impact on FI reporting, (2) the main hampered on its implementation, and (3) the need for the instruments and corporate governance mechanisms to mitigate the AEMP. Besides this research analyses (4) the relationship between the certified accountant’s characteristics (gender, age, professional experience, educational qualifications, and training area. To achieve the proposed objectives, we have used a quantitative methodological approach with a survey questionnaire, conducting an empirical study based on a sample of certified accountants. Based on a sample of 159 certified accountants, the results found that the majority of respondents indicate that Portuguese companies develop AEMP and that these practices have a negative and significant impact on the quality of financial statements (FS). Moreover, most certified accountants point out that is important to adopt measures that will prevent the abuse of AEMP and the main instruments for this are the establishments of more precise and concrete accounting standards and the application of the sanctions. The results also indicate that the audit committee and efficient internal control are corporate governance mechanisms AEMP able of mitigating the effects of the AEMP. Finally, the individual characteristics of certified accountants, such as professional experience, educational qualifications, and training area, significantly influence their perception of the need to mitigate the AEMP. This study presents relevant contributions to theory and practice. First, it develops the literature that evaluates AEMP, particularly in Portugal, where studies are scarce. Second, this study is original because it considers the relationship characteristics of accounting and AEMP professionals. Third, it allows entities that operate in accounting standardization and for accountants and FI users to have a more in-depth knowledge of the AEMP’s instruments and mechanisms.

scholarly journals Corporate Governance Mechanisms and Voluntary Disclosure

2020 ◽  
Vol 11 (2) ◽  
pp. 82
Author(s):  
Erwin Saraswati ◽  
Alfizah Azzahra ◽  
Ananda Sagitaputri
Keyword(s):  
Corporate Governance ◽  
Voluntary Disclosure ◽  
Family Firms ◽  
Stock Exchange ◽  
Annual Reports ◽  
Corporate Disclosure ◽  
Governance Mechanisms ◽  
Voluntary Disclosures ◽  
Corporate Governance Mechanisms ◽  
New Evidence

Corporate disclosure and corporate governance are two inseparable instruments of investor protection. This research sought to find evidence on how corporate governance mechanisms affect the extent of voluntary disclosures. Voluntary disclosures were measured using content analysis on published annual reports. The sample of this research consisted of 81 firm-year observations from 27 firms of consumer goods sector listed on Indonesian Stock Exchange from 2016 to 2018. Using multiple regression method, the result has shown that board size and board independence increase voluntary disclosures, indicating that the commissioners have effectively represented the interests of shareholders by monitoring and encouraging the management to increase disclosure. This research provided new evidence that family ownership increases voluntary disclosure, suggesting that family firms are more concerned by the costs of non-disclosure. Meanwhile, institutional ownership does not significantly affect voluntary disclosure. 

scholarly journals Corporate governance, family firms, and innovation

2020 ◽  
Vol 18 (1) ◽  
pp. 138-151
Author(s):  
Brian Bolton ◽  
Jung Eung Park
Keyword(s):  
Corporate Governance ◽  
Family Firms ◽  
Governance Mechanisms ◽  
Managerial Entrenchment ◽  
Ownership Structures ◽  
Corporate Governance Mechanisms ◽  
Dual Class ◽  
The Impact ◽  
Comprehensive Study ◽  
Board Ownership

We provide a comprehensive study of how corporate governance influences innovation at family firms. Specifically, we consider productive innovation or the impact that R&D spending has on firm revenues. First, we find that family firms do indeed generate more productive innovation than non-family firms, perhaps because they are better able to have a longer-term perspective. We then show how different corporate governance mechanisms influence this relationship. In general, board ownership and CEO ownership are associated with more productive innovation at all firms. Importantly, we find that managerial entrenchment leads to more productive innovation in general, consistent with prior research; however, contrary to prior research, we do not find this result at family firms, suggesting that it’s the ownership relationship, not managerial entrenchment, that drives innovation. We also find that independent boards are associated with greater innovation at family firms but not at non-family firms. Finally, we find that dual-class share structures are harmful for innovation at all firms. Our primary contributions are identifying how firms with different ownership structures focus on creating productive innovation and analyzing how ownership structures interact with different corporate governance mechanisms to allow the firm to make longer-term investments in innovation.

scholarly journals The Predictive Power of K-Nearest Neighbor (KNN): The Effect of Corporate Governance Mechanisms on Earnings Management

SAGE Open ◽  
2020 ◽  
Vol 10 (3) ◽  
pp. 215824402094953
Author(s):  
Mengyun Wu ◽  
Martha Coleman ◽  
Jonas Bawuah
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Management Practices ◽  
Nearest Neighbor ◽  
K Nearest Neighbor ◽  
Governance Mechanisms ◽  
Corporate Managers ◽  
Long Run ◽  
Corporate Governance Mechanisms ◽  
The Impact

This study investigates the long-run effect of corporate governance mechanisms on earnings management of listed companies in Nigeria and Ghana. The study uses Ant Colony Optimization (ACO) and K-Nearest Neighbor (KNN) in establishing a long-run effect of good corporate mechanisms in reducing earnings management practice by corporate managers. ACO selected four major corporate governance mechanisms: Board Procedure Index, Board Disclosure Index, Ownership Structure Index, and Shareholders’ Rights Index; these were the key corporate governance mechanisms that influence the reduction in earnings management activities. KNN produced a strong significant longitudinal effect of implementing good corporate governance mechanisms in decreasing the manipulating behavior of managers. Quality corporate governance mechanisms’ implementation reduces the opportunistic behavior of corporate managers in manipulating earnings. Therefore, the study alert policymakers the urgency in setting up appropriate policies to enhance the reduction in earnings management practices to provide accurate financial information for stakeholders’ financial decision-making. The use of ACO and KNN in the study is a great novelty, which presents a calibration and prediction of the impact of corporate governance mechanisms on earnings management showing the rate of reduction.

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.

Corporate Governance and Optimal Transparency

2014 ◽  
pp. 358-370
Author(s):  
Tom Berglund
Keyword(s):  
Corporate Governance ◽  
Information Disclosure ◽  
Shareholder Value ◽  
Point Of View ◽  
Governance Mechanisms ◽  
Long Run ◽  
Corporate Governance Mechanisms

This chapter explores the link between corporate governance and transparency. It begins by discussing definitions of corporate governance and transparency and goes on to review the literature on their relationship, covering also research on information disclosure. It then introduces a stylized model for the interrelationship between corporate governance and transparency. In key position is the board which is assumed to safeguard maximization of the long-run value of the firm’s equity in shareholders’ interests. Transparency is analyzed from shareholders’ point of view. The chapter highlights why increased transparency may reduce shareholder value and thus to a varying degree will be substituted with corporate governance mechanisms.

When family firm corporate governance fails: the case of El Corte Inglés

2019 ◽  
Vol 10 (2) ◽  
pp. 97-115
Author(s):  
María Sacristán-Navarro ◽  
Laura Cabeza-García
Keyword(s):  
Corporate Governance ◽  
Family Firms ◽  
Family Members ◽  
Family Firm ◽  
Governance Mechanisms ◽  
Content Type ◽  
Theoretical Concepts ◽  
Corporate Governance Mechanisms ◽  
The Right ◽  
Practical Implications

Purpose The purpose of this paper is to describe internal corporate governance mechanisms in family firms as well as conflicts that may arise among shareholders and family members in the absence of specific corporate governance mechanisms. Design/methodology/approach After presenting theoretical concepts, the authors study the case of Spanish family firm El Corte Inglés to understand some of the corporate governance difficulties the company has experienced over the past few years. Findings This case illustrates how corporate governance problems can arise because the right mechanisms have not been used, leading to conflicts among family members, valuation problems and power struggles. Practical implications There is a need for family firms to employ suitable corporate governance mechanisms as governance complexity increases. Originality/value This study aims to contribute to the understanding of corporate governance problems among family members and their possible solutions.

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