The Benefits of Family Ownership, Control and Management on Financial Performance of Firms (original) (raw)
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The effect of family control on firm value and performance. Evidence from Continental Europe
We investigate the relation between ownership structure and firm performance in Continental Europe, using data from 675 publicly traded corporations in 11 countries. Although family-controlled corporations exhibit larger separation between control and cash-flow rights, our results do not support the hypothesis that family control hampers firm performance. Valuation and operating performance are significantly higher in founder-controlled corporations and in corporations controlled by descendants who sit on the board as non-executive directors. When a descendant takes the position of CEO, family-controlled companies are not statistically distinguishable from non-family firms in terms of valuation and performance.
Family Ownership and Corporate Performance
Jurnal Akuntansi dan Pajak
The paper aims to investigate whether family ownership as controlling shareholder effect on firm performance. This paper uses ultimate (direct and indirect) ownership to identify a listed firm owned by family or non-family. Family ownership is majority shareholder for listed companies in Indonesia. Family ownership will be good impact (competitive advantage) or bad impact (private benefit) on companies. The study also motivates to study this topic because investigating on family ownership as controlling shareholder is limited in Indonesia. The study uses panel data or pooled data. The method for collecting data is archival. Unit of analysis of the study is organization. Sample of this study is 604 observations during 2001-2007. This study uses purposive sampling to collect data from the Indonesian Stock Exchange. This study collects and searches ultimate ownership on chain of ownership structure in manufacturing companies listed in the Indonesian Stock Exchange. This study uses ulti...
Family Business Review, 2011
This article analyzes, using various econometric techniques, how family ownership, family control, and the presence of a second significant shareholder affect firm performance. The authors studied a panel of 118 nonfinancial Spanish companies (711 observations) from 2002 to 2008. Once endogeneity issues were considered, it was found that family ownership did not influence profitability. What seems to matter is family control. This study also reveals the importance of taking into account unobservable heterogeneity and endogeneity issues when analyzing firm performance and provides an interesting future avenue of research: the role played by other large shareholders in family firms.
Family Involvement in Ownership and Management: Exploring Nonlinear Effects on Performance
Family Business Review, 2008
Research on the performance of family firms is growing, but results are mixed, especially for nonlisted companies. Thus, on the basis of the co-presence of benefits and disadvantages of family involvement in ownership and management, we explored the presence of nonlinear effects of these two variables on performance. We run regression analyses on data drawn from 620 privately held family firms in Italy: A negative quadratic relationship between family involvement in management and performance was found, but we did not find any association between family involvement in ownership and performance. Our results suggest that in privately held firms the positive effects that previous literature associates with the presence of family managers do not appear strong enough to compensate for the disadvantages deriving from a nonmonetary goal orientation, nor do they compensate for the costs deriving from the need to solve conflicts between family managers and the impossibility of enlarging the company's social and intellectual capital through the employment of nonfamily managers. Moreover, the quadratic nature of the relationship calls for greater attention to be paid to these effects by family business owners, especially in those cases where family involvement in management is high.
Management control in family firms: a guest editorial
Journal of Management Control
Family firms have received significantly higher levels of attention in business and management research in recent years (e.g., Daspit et al. 2017; Gedajlovic et al. 2012; Sharma 2017). Some scholars even report on an "explosive growth of interest in family business studies in the past decade" (Sharma et al. 2017, p. 316). Accounting research has been somewhat slower in examining the specifics of family firms. From a life-cycle perspective, accounting research on family firms is still in its infancy. Nevertheless, recent studies underpin that when it comes to accounting-and in particular, to management accounting and control-family firms display some distinctive features. For instance, recent reviews on accounting in family firms note that they show lower levels of formalization of accounting and control practices, exhibit specific and additional roles of accounting and control practices, and differ from non-family firms in important accounting choices such as earnings management (Helsen et al. 2017; Prencipe
The Influence of Large Stake Family Control on Performance: Is It Agency or Entrenchment?
Journal of Small Business Management, 2009
Agency theory posits that the greater degree of control by those with decisionmaking authority, the greater the overall organizational performance. Conversely, entrenchment theory implies that at extremely high levels of inside control by those with decision authority, organizational performance decreases. Using a nationwide sample of 2,631 privately held and publically traded family businesses, we examined if the relationship of percent family ownership is an agency or entrenchment relationship and found the latter. Specifically, there was a statistically significant negative relationship between percent of family control and sales growth as well as a strong inverse relationship between percent of family controlling the top management team and all measures of financial performance.
Family Matters?: A Cross‐National Analysis of the Performance Implications of Family Ownership
Corporate Governance: An International Review, 2016
Manuscript TypeEmpiricalResearch Question/IssueThis study makes use of a large multi‐country sample to examine how the market performance of family firms is affected by national context.Research Findings/InsightsWe find that Tobin's Q among family firms is significantly lower than that of non‐family firms across 33 countries. In examining these effects, results suggest that legal context and national culture influence the performance implications of publicly traded family firms, serving to mitigate some of the generally negative impact.Theoretical/Academic ImplicationsWe find that national context is an important contingency in determining the family's ability and willingness to exploit minority shareholder wealth. Building upon our results, future research can focus on how formal and informal institutions may be substitutes for each other. Our results help explain why prior empirical research provides conflicting results regarding the impact of family governance on firm val...
Ownership Concentration of Family and Non-Family Firms and the Relationship to Performance
2014
This paper analyzes whether family enterprises perform better than non-family enterprises, as found in previous studies on Chilean companies, based on the ownership structure of the business, which is an important factor in the literature on corporate governance that had not been taken into account. The analysis confirmed that family enterprises performed better than non-family enterprises and that the effect of ownership concentration on business performance depends on the type of enterprise, regardless of whether it is family-owned. Lastly, the results suggest that performance is better when there is a concentrated ownership, comprised both of shareholders who are family members and others who are not, than with other schemes of corporate governance.
2016
This paper analyzes the governance practices in the dimension of the family and ownership, and its impact in the financial and family performance. From an empirical perspective, we provide a exploratory evidence on how the governance practice in the structures of governance in the family and ownership, impacts in the financial results and the socioemotional wealth of the family.The results show that the implementation of corporate governance practices in the family and ownership dimensions is not a reliable indicator of a direct relationship with business performance. In addition, we found strong tendencies to preserve the family’s socioemotional wealth. Furthermore, unity, honesty, transparency and amity are factors boosting both family and business success.This study has some limitations, the qualitative method used, such as the case study, allows an analytic exploration of the findings. However, it would be suitable further future quantitive approaches to generalize our results a...