"Rigging the Contest? CEO Succession in Family Firms: Contest and Agency Theory, & Evidence."

2015 ◽  
Vol 2015 (1) ◽  
pp. 14257
Author(s):  
Jan-Philipp Ahrens ◽  
Michael Woywode ◽  
Jan Zybura
Keyword(s):  
Agency Theory ◽  
Family Firms ◽  
Ceo Succession

Birth mode of family firms, family entering time and R&D investment: evidence from China

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Zulfiqar ◽  
Shihua Chen ◽  
Muhammad Usman Yousaf
Keyword(s):  
Agency Theory ◽  
Family Firms ◽  
Family Firm ◽  
Research Database ◽  
Content Type ◽  
Firm Birth ◽  
The Relationship ◽  
D Investment ◽  
Moderating Role

PurposeOn the basis of behavioural agency theory and resource-based view, this study investigates the influence of family firm birth mode (i.e. indirect-established or direct-established), family entering time on R&D investment and the moderating role of the family entering time on the relationship between birth mode and R&D investment.Design/methodology/approachThe authors collected 2,990 firm-year observations from family firms listed on A-share in China from 2008 to 2016 in the China Stock Market and Accounting Research database. They used pooled regression for data analysis and Tobit regression for robustness checks.FindingsIndirect-established family firms show more inclined behaviour towards R&D investment than direct-established counterparts. Family entering time positively affects the R&D investment of family firms. Moreover, family entering time plays a significant moderating role in the relationship between family firm birth mode (i.e. indirect-established or direct-established) and R&D investment.Originality/valueTo the best of the authors’ knowledge, this work is a pioneering study that introduced the concept of family firm birth mode (i.e. indirect-established or direct-established) and family entering time. This work is novel because it differentiated family firms according to their birth modes, an approach which is a contribution to the existing literature of family firms. Moreover, the investigation of the moderating role of family entering time has also produced notable results that help understand the impact of family entering time on different types of family firms. The interpretation of outcomes according to behavioural agency theory also produced useful insights for future researchers as well as for policymakers.

CEO succession in family firms: Stewardship perspective in the pre-succession context

2016 ◽  
Vol 69 (11) ◽  
pp. 5111-5116 ◽  
Author(s):  
Yi-Min Chen ◽  
Hsin-Hsien Liu ◽  
Yung-Kai Yang ◽  
Wei-Hua Chen
Keyword(s):  
Family Firms ◽  
Ceo Succession

scholarly journals Do family firms perform better: A Belgian survey

2007 ◽  
Vol 4 (4) ◽  
pp. 173-182
Author(s):  
Christiane Bughin ◽  
Olivier Colot ◽  
Karin Comblé
Keyword(s):  
Agency Theory ◽  
Empirical Evidence ◽  
Ownership Structure ◽  
Family Firms ◽  
Management Practices ◽  
Family Values ◽  
Economic Literature ◽  
Paired Samples ◽  
Better Than

A large conceptual economic literature presents assumptions that family owned and controlled firms perform better than others, essentially on the basis of agency theory, ownership structure, cultural specificities and particular management practices. Large empirical evidence has been supplied by various studies, even if there are still contradictory debates. This paper uses the paired samples methodology to compare operational, economic and financial profitabilities of Belgian family firms. Evidence is given that they perform better, and this significantly for economic profitability. Discussion is engaged about the contribution of family values and practices to their results.

The Enigma of the Family Successor–Firm Performance Relationship: A Methodological Reflection and Reconciliation Attempt

2019 ◽  
Vol 43 (3) ◽  
pp. 437-474 ◽  
Author(s):  
Jan-Philipp Ahrens ◽  
Andrea Calabrò ◽  
Jolien Huybrechts ◽  
Michael Woywode
Keyword(s):  
Firm Performance ◽  
Family Member ◽  
Family Involvement ◽  
Family Firms ◽  
Empirical Studies ◽  
Ceo Succession ◽  
The Family ◽  
The Individual ◽  
Positive Effect ◽  
Methodological Reflection

Empirical studies examining firm performance following CEO succession in family firms predominantly document inferior performance of family successors. This evidence is at odds with general theoretical literature that attests a positive effect of family involvement inside the firm. To explore this enigma, we theoretically and empirically disentangle the influence of the CEO attribute family member (i.e., the CEO is affiliated to the family) on post-succession firm performance, from other, distinct CEO attributes (e.g., CEO-related human capital). Our analysis on the individual CEO level shows that after respective controls, the family member attribute is significantly positively related to post-succession firm performance.

scholarly journals To Merge, Sell, or Liquidate? Socioemotional Wealth, Family Control, and the Choice of Business Exit

2019 ◽  
Vol 46 (8) ◽  
pp. 1342-1379 ◽  
Author(s):  
Francesco Chirico ◽  
Luis R. Gómez-Mejia ◽  
Karin Hellerstedt ◽  
Michael Withers ◽  
Mattias Nordqvist
Keyword(s):  
Agency Theory ◽  
Financial Distress ◽  
Family Firms ◽  
Matched Sample ◽  
Financial Returns ◽  
Socioemotional Wealth ◽  
Family Control ◽  
Privately Held Firms ◽  
Exit Options ◽  
Behavioral Agency

We take the perspective that considering the affective motives of dominant owners is essential to understanding business exit. Drawing on a refinement of behavioral agency theory, we argue that family-controlled firms are less likely than non-family-controlled firms to exit and tend to endure increased financial distress to avoid losses to the family’s socioemotional wealth (SEW) embodied in the firm. Yet, when confronted with different exit options and when performance heuristics suggest that exit is unavoidable, family firms are more likely to exit via merger, which we argue saves some SEW, although it is less satisfactory financially. In contrast, nonfamily firms are more likely to exit via sale or dissolution, options that are more prone to offer higher financial returns than mergers. Family and nonfamily firms thus show different orders of exit options. We find support for these arguments in a longitudinal matched sample of privately held firms.

Succession and Nonsuccession Concerns of Family Firms and Agency Relationship with Nonfamily Managers

2003 ◽  
Vol 16 (2) ◽  
pp. 89-107 ◽  
Author(s):  
Jess H. Chua ◽  
James J. Chrisman ◽  
Pramodita Sharma
Keyword(s):  
Agency Theory ◽  
Family Business ◽  
Family Firms ◽  
Business Management ◽  
Research Topic ◽  
Agency Relationship ◽  
Empirical Results ◽  
Top Executives

This article consists of two parts. The first part reports findings from a survey of the issues facing top executives in 272 Canadian family firms. Results show that succession is their No. 1 concern, thus supporting the predominant focus of family business researchers on succession issues. Results also show that concern about relationships with nonfamily managers is a close second in importance. The second part of the article uses Agency Theory to explain why relationships with nonfamily managers are so important. Empirical results show that both the extent and the criticality of a firm's dependence on nonfamily managers are statistically significant determinants of the importance. This study implies that relationships with nonfamily managers is a neglected research topic and points to a new direction for research in family business management.

The Influence of Family Ownership on Long-Lived Asset Write-Offs

2015 ◽  
Vol 28 (4) ◽  
pp. 355-371 ◽  
Author(s):  
Giulio Greco ◽  
Silvia Ferramosca ◽  
Marco Allegrini
Keyword(s):  
Firm Performance ◽  
Earnings Management ◽  
Agency Theory ◽  
Family Firms ◽  
Family Ownership ◽  
Agency Conflicts ◽  
Asset Value

Building on agency theory, this article investigates whether family firms’ accounting behavior regarding long-lived asset write-offs differs from that of nonfamily firms. We provide evidence that nonfamily firms use write-offs for earnings management purposes, while family firms report write-offs coherent with the firm performance. Family firms experience dwindling sales and lower profitability in the years following the write-offs, consistently with an effective decline in their assets value. The findings are consistent with reduced owner-manager agency conflicts in family firms. We find no indication of family entrenchment, which is consistent with family owners being concerned with the reputational damage associated with a loss of a firm’s asset value.

scholarly journals Measuring the efficacy of board governance: Empirical evidence from Italian publicly listed companies

2019 ◽  
Vol 16 (2) ◽  
pp. 25-37 ◽  
Author(s):  
Francesco Napoli
Keyword(s):  
Agency Theory ◽  
Resource Dependence ◽  
Family Firms ◽  
Listed Companies ◽  
Resource Dependence Theory ◽  
Family Firm ◽  
Fiduciary Duty ◽  
Performance Variability ◽  
The One ◽  
Interlocking Directors

Recent progress in the literature shows that board efficacy might be signaled by lower firm performance variability in a firm’s income, since the board has a fiduciary duty to protect shareholder investments that may be affected when performance is variable. Our analysis is an attempt to contribute to this debate by extending it to include family firms. In particular, we detect appointments of directors to family firm boards within a sample of 483 observations (year/firm) regarding Italian publicly listed companies. Sampled family firms have one of the family members as CEO and/or chairman (in cases of non-CEO duality) of the firm’s board. The aim is to test predictions which suggest that the presence of independent (Agency Theory), on the one hand, and interlocking directors (Resource Dependence theory), on the other, have a significant impact on performance stability. Unlike agency theory, which affirms that independents are efficient, our findings suggest that the number of independents on the board of a family firm has no impact on performance stability. Instead, we find that interlocking directors can provide a significant contribution to the achieving of lower performance variability.

Managing tensions as paradox in CEO succession: The case of nonfamily CEO in a family firm

2020 ◽  
Vol 38 (3) ◽  
pp. 211-242
Author(s):  
Judith van Helvert-Beugels ◽  
Mattias Nordqvist ◽  
Roberto Flören
Keyword(s):  
Resource Allocation ◽  
Family Firms ◽  
Longitudinal Research ◽  
Family Firm ◽  
Work Relationships ◽  
Advisory Board ◽  
Role Transition ◽  
Ceo Succession ◽  
Effective Work ◽  
The Family

An increasing number of family firms choose to select a nonfamily CEO for the highest executive office. However, appointing a nonfamily CEO in a family firm tends to give rise to tensions that need to be managed for effective work relationships between the nonfamily CEO and the family owners. We draw on insights from the paradox literature to better understand these tensions and how they are managed. We performed real-time, in-depth longitudinal research into one family firm, which appointed a nonfamily CEO, and studied tensions in the work relationships between the nonfamily CEO and the family owners for a period of three years. We identified tensions arising in four specific areas after the transition from a family to a nonfamily CEO: professionalisation, collaboration, resource allocation and role transition. We found new insights regarding how an advisory board can provide support for the family owners in building work relationships with the nonfamily CEO, which makes the tensions salient and possible to manage through a paradox approach. These results inform a perspective of paradox management that shows by whom and how the different tensions are managed, that is, through changes in behaviour and/or through changes in the underlying subsystems of the family firm.

Leverage and Family Firms

2020 ◽  
pp. 191-208
Author(s):  
Sergio Camisón-Haba ◽  
José Antonio Clemente ◽  
Beatriz Forés ◽  
Melanie Grueso-Gala
Keyword(s):  
Panel Data ◽  
Capital Structure ◽  
Agency Theory ◽  
Ownership Structure ◽  
Theoretical Approach ◽  
Family Firms ◽  
Tourism Industry ◽  
Individual Heterogeneity ◽  
The Relationship ◽  
Positive Effect

This chapter analyses the relationship between ownership structure and leverage, providing an integrated theoretical approach that combines traditional financial theories, agency theory, and recently developed theories relating to non-financial preferences. The results show that, after controlling for endogeneity, being a family firm has a positive effect on the propensity to incur debt. These findings add to the existing body of literature and underline the need for a multi-theoretical approach when explaining the capital structure of family firms. The authors apply panel data methodology to control for individual heterogeneity of family firms. The chapter uses a sample of Spanish firms operating in the tourism industry.

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