The Effects of Ownership and Control Right on Corporate Value in Korean Family Firms: Perspective of Tunneling and Propping

Children with and without behavioral dichotic left-ear deficits participated in an event-related potential study with quasidichotic presentations of familiar fairy tale segments. Electrical activity was recorded from the scalp while the children listened for semantically and/or syntactically anomalous words from either the right side or the left side while competing segments of the fairy tale were simultaneously presented from the opposite side. Latencies and amplitudes were averaged for each target condition within the group with dichotic left-ear deficits (LED) and the group with normal dichotic listening performance (WNL). Individual global field power waveforms and topographic brain maps were generated for the average response in each of the two listening conditions, target right and target left. Cross-correlations were performed on the grand averaged global field power waveforms to measure the degree of synchrony between target right and target left responses in both groups. Integration functions were performed to compare the accumulated sum of voltages during target (right and left) and control (right and left) conditions. WNL children produced typical ERP responses to the target words in both target right and target left conditions. Responses from LED children were at delayed latencies in the target left condition and were at reduced amplitudes in both target conditions. Topographic brain maps revealed more lateralized scalp distributions and greater activation of frontal regions in LED children in the target left condition. Cross-correlational and integration function results demonstrated interaural asymmetries in responses from the LED children. Overall results suggest that slowed neural conduction times, poor interhemispheric transfer of neural activity, and a failure to suppress competing information arriving at the right ear may be involved in poor left-sided processing in children with behavioral left-ear dichotic deficits.

Download Full-text

The Salience of Market, Bureaucratic, and Clan Controls in the Management of Family Firm Transitions: Some Tentative Australian Evidence

Family Business Review ◽

10.1111/j.1741-6248.2000.00091.x ◽

2000 ◽

Vol 13 (2) ◽

pp. 91-106 ◽

Cited By ~ 85

Author(s):

Ken Moores ◽

Joseph Mula

Keyword(s):

Family Firms ◽

Family Firm ◽

Life Cycles ◽

Family Businesses ◽

Control Measures ◽

Nationwide Study ◽

Economic Significance ◽

Australian Family ◽

And Control

Despite the numerical and economic significance of family businesses to Australia, they are not extensively researched. This paper reports some of the results from a nationwide study of Australian family-owned businesses that sought to ascertain and understand their management and control practices. In particular, the paper assesses the organizational transitions of Australian family firms in terms of their dominant control practices. These control measures are evaluated according to Ouchi's classification of market, bureaucratic, and clan controls. The salience of these different forms of control serves to identify distinctive patterns that define periods of organizational passage (life cycles).

Download Full-text

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

10.26686/wgtn.17011394 ◽

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>

Download Full-text

Earnings Management and Corporate Governance in Family Firms

International Financial Reporting Standards and New Directions in Earnings Management - Advances in Finance, Accounting, and Economics ◽

10.4018/978-1-5225-7817-8.ch006 ◽

2019 ◽

pp. 127-153

Author(s):

Elisabete Vieira ◽

Mara Madaleno

Keyword(s):

Corporate Governance ◽

Earnings Management ◽

Audit Committee ◽

Family Firms ◽

Management Practices ◽

Corporate Board ◽

Listed Firms ◽

Big 4 ◽

Ownership Effect ◽

And Control

Earnings management and corporate governance relationships are examined for a sample of 49 Portuguese listed firms considering an unbalanced panel for the period 2002-2017, using panel corrected standard errors models and considering the family ownership effect. Empirical findings reveal that there is a positive relationship between corporate board independence and earnings management and that the presence of women on board decreases earnings management practices. Results are consistent with the hypothesis that earnings management practices are lower in family firms than in non-family firms. Size, being audited by the Big 4 companies, return on assets, loss, and the existence of an audit committee on board influence positively earnings management, but leverage, age, and ownership control are negatively related to earnings management. Results indicate that further auditing and control is necessary for Portuguese listed companies leading to strict recommendations to be followed by policymakers regarding control of these firms.

Download Full-text

Optimal design of venture capital financing contracts: the case of Portuguese, Spanish and German markets

Studies in Economics and Finance ◽

10.1108/sef-10-2019-0424 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Maria do Rosario Correia ◽

Raquel F. Ch Meneses

Keyword(s):

Venture Capital ◽

Qualitative Comparative Analysis ◽

Contract Design ◽

Control Rights ◽

Content Type ◽

Convertible Securities ◽

Mixed Support ◽

Capital Financing ◽

Control Right ◽

And Control

Purpose This study aims to investigate the use of convertible securities and control rights covenants for a sample of 53 Portuguese, Spanish and German venture capital (VC) firms. Design/methodology/approach A relatively new methodology in business sciences – a fuzzy set qualitative comparative analysis – that considers both quantitative and qualitative factors is used for obtaining a solution that best fits the empirical data. Findings The results show that the use of convertible securities is affected by agency predictions, namely, the anticipated severity of double-sided moral hazard problems. On the other hand, a mixed support is provided to the agency predictions regarding the use of control right covenants. The results seem to suggest that control right covenants tend to play a different role from convertible securities in the optimization of contract design for VC-backed investments. Originality/value Existing literature on VC contract design is extended by providing a cross-border analysis to VC financing decision.

Download Full-text

Socio-emotional wealth preservation and KPI voluntary disclosure quality

Journal of Financial Reporting and Accounting ◽

10.1108/jfra-09-2019-0113 ◽

2020 ◽

Vol 18 (3) ◽

pp. 459-482

Author(s):

Saoussen Boujelben ◽

Chourouk Boujelben

Keyword(s):

Voluntary Disclosure ◽

Family Firms ◽

Family Members ◽

Family Influence ◽

Disclosure Quality ◽

Content Type ◽

The Family ◽

And Control ◽

Practical Implications

Purpose The purpose of this paper is to examine the effect of the emotional attachment strength of family members to their business on the quality of the voluntary disclosure of their key performance indicator (KPI). More specifically, the authors focused on the effect of two dimensions of the socio-emotional theory, i.e. “family influence and control” and “firm dynasty succession.” Design/methodology/approach The authors performed a content analysis of annual reports for a sample of 87 French families listed in CAC All-Tradable to calculate a disclosure quality index of KPI. The authors proxied the “family influence and control” by the proportion of family members appointed in the board. To identify the “firm dynasty succession” concern, the authors classified firms according to the generation they belonged to. The authors estimated a cross-sectional linear regression model to meet the research objective. Findings This study confirms the role of the family affective attachment in decreasing the quality of KPI disclosure in such a way to preserve its socio-emotional wealth. The family firms’ principals who desire to sustain their control on the firm, to perpetuate the business for future generations and to protect their emotional wealth tend to avoid the disclosure of credible and reliable KPI information. Practical implications The findings have meaningful practical implications. First, they provide relevant insights into the regulatory bodies of the financial reporting regarding the increasing appeal for making KPI disclosure mandatory. Second, as the family businesses are the most widespread proprietorship in the French context, the effect of the family agenda on the quality of the KPI should be of interest to various policymakers and financial statements’ users of such firms. Third, the results inform nonfamily shareholders regarding the importance of selecting representatives on the board that should share similar interest with regard to KPI disclosure. Social implications From a societal perspective, this study is relevant in taking into account the critical role the family businesses have in the French economy. This study should help the minority shareholders to protect their interests and maximize their wealth within the family firm because it sheds light on the influence that family members have on hiding key information on the firm’s real performance. Originality/value To the best of the authors’ knowledge, no prior study in the family firms literature has examined the quality of voluntary disclosure of KPI. Although most previous studies merely compared family and nonfamily firms in terms of voluntary disclosure, the authors acknowledge and address the heterogeneity between family firms. The authors contribute to the few prior empirical validations of SEW implication on voluntary disclosure decisions by testing the effect of an additional dimension, which is family dynasty.

Download Full-text

The effect of internal factors and family influence on firms’ adoption of green product innovation

Management Research Review ◽

10.1108/mrr-02-2015-0031 ◽

2016 ◽

Vol 39 (10) ◽

pp. 1167-1198 ◽

Cited By ~ 12

Author(s):

Yi-Chun Huang ◽

Min-Li Yang ◽

Ying-Jiuan Wong

Keyword(s):

Firm Size ◽

Family Firms ◽

Behavioral Theory ◽

Family Influence ◽

Future Research ◽

Green Product ◽

Internal Factors ◽

Content Type ◽

And Control ◽

The Relationship

Purpose Little research has been conducted on the internal factors that drive green product (GP) innovation and how family influence affects firm adoption of GP innovation. This study aims to apply multiple perspectives to bridge this research gap, adopting the resource-based view (RBV) to examine what and how internal factors affect firm adoption of GP innovation, and using the behavioral theory of family firms to investigate whether family influence fosters or hinders firm adoption of GP innovation. Design/methodology/approach This study used a multichannel approach and adopted content analysis to collect and evaluate data on listed Taiwanese firms and used cross-sectional regression analysis to examine the effect of internal factors and family influence on firm adoption of GP innovation. Findings The results showed that the internal factors of green capabilities, R&D intensity and firm size significantly and positively affected firm adoption of GP innovation separately. Furthermore, the study found that family influence (ownership and control) significantly and negatively affects firm adoption of GP innovation separately. Research limitations/implications This study contributes to the academic research of innovation management, green management and family firms in several aspects, but also has some limitations. This study examined only the relationship between a firm’s internal factors and GP innovation. Future research might test the relationship between a firm’s internal factors and adoption of green process innovation. In addition, such research can explore how integrated internal and external factors influence firm adoption of GP innovation. Practical implications From the RBV, the internal factors of green capabilities, R&D intensity and firm size that can exert crucial effects on firm engage in firm’s adoption of GP innovation. This study suggests that top managers in family-influenced businesses should maintain appropriate commitment and support for fostering and facilitating firm GP innovation. Social implications From the RBV, this study examined how internal factors affect firm adoption of GP innovation. Moreover, based on the behavioral theory of family firms, this study further examined how family influence (ownership and control) affects firm adoption of GP innovation. This paper extended both perspectives to examine green issues. Originality/value From the RBV, this study examined how internal factors affect firms’ GP innovation. Moreover, based on institutional theory, this study further examines how a family firm moderates the relationship between a firm’s internal factors and GP innovation. The paper extended both perspectives to probe further the green issues.

Download Full-text