Promoting organizational diversity and preserving socioemotional wealth: can family businesses balance the two?

PurposeA key characteristic for a family firm, preservation of socioemotional wealth, may appear to be at conflict with the concept of organizational diversity. The authors investigate how organizational diversity, captured through heterogeneity in ownership structure, diversity in the senior management team, interfaces with the concept of the socioemotional wealth of family businesses in an emerging economy, when these firms pursue inorganic growth strategies.Design/methodology/approachDrawing on the concepts of socioemotional wealth, behavioral agency theory and bifurcation bias, the authors develop perspectives on how ownership structure, family influence in executive management and institutional shareholding influence a family firm's internationalization strategies captured through propensity to pursue cross-border M&A – an activity that may threaten the preservation of socioemotional wealth. The authors also explore the role of business group affiliation, another organizational diversity construct, and contingent parameters like past financial performance and export intensity in this study. The authors take pooled data over 15 years, involving 346 large firms from India, which are family-controlled, to carry out the study.FindingsThe authors’ empirical analysis shows that family stake in the company and family members' presence in the executive team negatively influence the propensity to pursue cross-border M&A activities. A firm's affiliation to a business group moderates these negative relationships. On the other hand, the presence of institutional shareholders, positive past financial performance and export intensity positively influence cross-border M&A propensity.Originality/valueThe results establish that family businesses' attempts to preserve socioemotional wealth may come at the cost of promoting organizational diversity.

Presentation of Novel Multiple Regression Model for Accounting Information Quality, Corporate Investment, and Moderating Role of Ownership Structure in Companies

The conflicts of interest between managers and shareholders force managers to make decisions that do not meet the interests of shareholders. One of these decisions is to invest less in the company’s operational activities. Increasing the information quality is one way to prevent that issue, allowing stakeholders to monitor investment decisions. The present study investigates the relation of accounting information quality, corporate investment, and ownership structure for Iranian firms, using panel data analysis from 2009 to 2018. We applied a multiple regression model to test the hypotheses. The results show that the quality of accounting information significantly affects the investment decision for the company’s main operations, so the first hypothesis of the research is confirmed. At the same time, there is no effect of capital structure on accounting information quality and firms’ investment decisions. Thus, the second hypothesis of the research failed to be confirmed.

The Effect of Managerial Ownership Structure, Financial Distress and Growth Opportunities to Application of Accounting Conservatism Principles with Litigation Risk as Moderating Variables on Manufacturing Companies Listed on the Indonesia Stock Exchange

This study aims to examine and analyze the effect of managerial ownership structure, financial distress, and growth opportunities on accounting conservatism with litigation risk as a moderating variable. The population in this study was 171 manufacturing companies listed on the Indonesia Stock Exchange for the 2010-2019 period. This research was conducted using the purposive sampling technique so that 36 samples were obtained. The data analysis method used multiple linear regression analysis and interaction tests with the help of the Eviews application program. The study results indicate that growth opportunities partially have a positive effect on applying the principle of accounting conservatism. Meanwhile, managerial ownership structure and financial distress partially do not affect the application of accounting conservatism principles. Simultaneously managerial ownership structure, financial distress and growth opportunities affect the application of accounting conservatism principles. Litigation risk as a moderating variable cannot moderate the influence of managerial ownership structure, financial distress, and growth opportunities on applying accounting conservatism principles to manufacturing companies listed on the Indonesia Stock Exchange for the 2010-2019 period. Keywords: managerial ownership structure, financial distress, growth opportunities, litigation risk and accounting conservatism.

The effect of ownership structure, dividend policy, composition of the board of directors on financial performance and share return

The purpose of this study is to examine and analyze the direct and indirect effects of the variable ownership structure, board composition, dividend policy, and financial performance and stock returns in the manufacturing industry on the Indonesia Stock Exchange. The population of this research is manufacturing industrial companies on the IDX since 2015 and was still active until 2019. The sample obtained is 92 issuers who continuously distribute dividends. Testing the research hypothesis, using the structural equation model (SEM) with the Partial Least Square (PLS) software approach. The results show that the ownership structure significantly affected the composition of the board of directors and dividend policy. Ownership structure has no significant effect on stock returns and financial performance. The composition of the board of directors has a significant effect on dividend policy and financial performance but has no significant effect on stock returns. Dividend policy has a significant effect on financial performance but has no significant effect on stock returns. Financial performance has no significant effect on stock returns.

The Quadruple Sustainability

This chapter analyzes the relationship between ownership structure and sustainability performance adopting the socioemotional wealth approach. This work extends previous literature on the topic by considering the three dimensions of sustainability performance: economic, social, and environmental. Analysis with the matching technique revealed that being a family firm has a positive effect on economic profitability, growth sales, employees training and commitment, investment in R&D, environmental commitment, and cooperation agreements with external partners. The authors use a sample of Spanish firms operating in the tourism industry.

Leverage and Family Firms

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.

Effect of Ownership Structure on Firm Performance Evidence From Non-Financial Listed Firms

In modern organizations, there is a separation between ownership and control of the firm. On the lenses of agency theory, this study statistically examines the relationship between ownership structure (i.e., ownership concentration and owner identity) and firm performance of non-financial listed firms of Pakistan by taking firm-level control variables of size, age, liquidity, financial leverage, and growth of the firm. Secondary data is collected from annual reports of 65 non-financial listed firms for the year 2008 to 2012. The least-square dummy variable model followed by the random effect model has been employed to statistically determining the impact of ownership structure on firm performance. The results of the least square dummy variable model reveal that the ownership concentration has a significant positive impact on firm performance. The owner identity (such as dispersed, family, institutional, and government ownership) has a significant causal effect on firm performance as indicated from t and p values.