Can reputation concern restrain bad news hoarding in family firms? (original) (raw)
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We investigate the determinants of the market reaction to the announcement of the appointment of a CEO successor in French, German and UK listed family firms with an incumbent, family CEO during 2001-2010. Given the strong family control, we conjecture that investors expect a family successor and hence do not react to the announcement of the appointment of the latter. In contrast, the announcement of the appointment of a nonfamily successor is likely to be met by positive cumulative abnormal returns (CARs). In line with our conjecture, we do not find a market reaction to the announcement of the appointment of a family CEO, whereas the announcement of a nonfamily successor elicits positive and significant CARs. We then study the determinants of the market reaction to the announcement of a nonfamily successor. We find that the poorer the past performance of the firm, the more positive are the CARs. Also, the greater the board independence, the less positive are the CARs for poorly per...
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This study explores the impact of busy directors on the stock price crash risk if an individual holds three or more board positions. Since Indonesia has adopted a two-tier system, directors refer to Commissioners. Most of the literature suggests that the main risk factor for stock price crashes arises from the tendency of management to withhold adverse news from investors regarding compensation contracts and career issues. This research aims to verify whether busy directors help to limit managerial opportunistic behavior. Results show that multiple positions bring no effect on the stock price crashes risk due to cross over interaction which negated the substantial effect on the risk of stock price crashes. As a country with high family ownership concentration, the results illustrate that family firms in Indonesia will strengthen the influence of Commissioners who hold multiple positions in reducing stock price crashes risk. This investigation uses a sample of companies listed in the...
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Corporate governance and family firm performance during the Global Financial Crisis
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We investigate the impact of corporate governance on accounting and market performance relationships of family firms during the Global Financial Crisis (GFC). We expect the monitoring aspects of corporate governance to complement the long-term orientation of family firms, improving the value relevance of accounting and market performance during times of exogenous financial shocks such as the GFC. We find that the family-firm value is more sensitive to book value than earnings changes. We also find better corporate governance, irrespective of whether it is a family firm or non-family firm, is associated with better accounting and market performance during the GFC.
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