A Study on Ownership Concentration by Family Members and Financial Performance: Evidence from India (original) (raw)
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This study evaluates the impact of family ownership on the firm's performance during 2004 and 2009 considering a sample of 29 manufacturing firms listed at KSE-100 index in the Pakistani capital market. The dependent variable is performance which is measured by Return on Asset (ROA), Return on Equity (ROE) and Tobin's Q of the sample firm and the independent variable is family ownership. Linear regression model is used for estimation along correlation analysis. The study reported positive relation between the ownership variable and performance variables. The results indicate negative association between the ownership variable and firm's dividend payment, concluding that family control firms prefer to retain earning and investment opportunities rather to distribute the earnings. The empirical analysis reveal that the overall better governance practices have positive affect on financial decisions. However, the firms with more family ownership do not adopt good practices and disclose less.
SSRN Electronic Journal, 2000
This paper studies the impact of promoters' family control and corporate governance on firm value. Purposive sampling method was adopted to choose sample firms from those listed in the Bombay Stock Exchange (BSE). Of the 4573 firms listed in BSE, banking, insurance and financial firms were excluded as they are governed by different bodies. Foreign firms and companies acquired during the period of investigation were also excluded. So a sample of 771 firms during the period 2001 to 2005 was studied. The data were analyzed using 't' test to find the difference in the firm value between promoter family controlled and nonpromoter family controlled firms. Multiple regression analysis was conducted to identify the factors that affect firm value. This study found that the firm value is not significantly affected by the ownership type of the firm.
Influence of Family Ownership and Governance on Performance: Evidence from India
Global Business Review, 2020
This study examines how firm performance is impacted by family ownership and governance in an emerging market. Employing a panel data set of listed companies from National Stock Exchange (NSE) of India for the period 2011–2017, this study analyses the relationship between family ownership and firm performance while controlling for variables like impact of external environment and characteristics of firms. The performance of firms is measured by accounting measures of performance and Tobin’s Q. The findings of this study suggest that family ownership and firm performance have a nonlinear relationship and family ownership has a positive impact on firm performance till a certain point and after that it starts affecting firm performance negatively. This study also finds that family involvement in governance positively affects the firm 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...
Th e current study attempts to investigate the impact of family ownership structure on investment decisions of fi rms listed at the Karachi Stock Exchange (KSE) of Pakistan. For distinguishing family owned business (FOB) from non-family (NFOB), two threshold points of ownership structure (25% & 50%) were used. Panel data forms ranging from the period 2002-2013 were collected from diff erent sources such as annual reports of fi rms, fi nancial statements, business recorder, stock exchanges, telephone calls, emails and balance sheet analyses of joint stocks. Generalized Method of Moments (GMM) was applied to estimate the coeffi cients of variables of interest. Empirical results revealed that there was stronger positive impact of cashfl ow on investment in NFOBs in comparison with FOBs. Conversely, family fi rms have lower investment-cashfl ow sensitivity even when blockholder's eff ect was taken in consideration. Th e estimated coeffi cients confi rmed less investment-cash fl ow sensitivity in those fi rms comparatively where professional manager serves as a chief executive offi cer (CEO). It was also revealed that family fi rms alleviate fi nancial constraints as well as free cash fl ow problems. It was concluded that broader investment horizons, corporate governance mechanism and fl exibility to manage fi nancial constraints make family fi rms capable of reducing investment-cash fl ow sensitivity.
International Journal of Management and Sustainability, 2015
The current study attempts to investigate the impact of family ownership structure on value of firms listed at the Karachi Stock Exchange (KSE) of Pakistan. For the distinction of FOB from Non-FOB, two threshold points (25% & 50%) of ownership structure are used. A sample of 280 listed firms at KSE is collected ranging for the period 2002-13. Generalized Method of Moments (GMM) is applied on panel data to estimate the coefficients of variables. The empirical results indicate that the family firms outperform the non-family ones. The better performance of young generation of family firms over succeeding generation is also revealed but professional chief executive officer (CEO) over family member is preferred. Furthermore, this study discovers inflection points i.e. (62% & 57%) for family and non-family firms under quadratic specification respectively.
Corporate Ownership and Control
We study 288 family firms included in the NSE CNX 500 index of the National Stock Exchange of India. We find an entrenchment-alignment-entrenchment relationship between family ownership and firm value. We show that family CEO has a negative moderating effect on the relationship between family ownership and firm value. When the interaction effect of Family CEO on family ownership is controlled, only family shareholding in the alignment range is found to be statistically significant. The study shows that family firms with family CEO suffer from a decrease in market valuation. This finding is extremely valuable given the fact that India is dominated by family firms and majority of family firms appoint a family member as CEO
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.
The purpose of this study is to investigate the relationship of family ownership concentration on the firm's value in Pakistan. In order to obtain the objective family ownership concentration were taken as independent variables while firm' value as dependent variable. A sample of 14 companies listed at Karachi Stock Exchange from 2008-2012 selected from automobiles industry of Pakistan. Multiple regression modal was used to regression the explanatory variables. The result revealed that there was positive significant relationship of family ownership concentration and firm value. The result may also be help full for Investors and financial & administration advisors.
Do Family Ceos Impact Firm Value? An Empirical Analysis of Indian Family Firms
Corporate Board: role, duties and composition
We study the association between family CEO and firm value on a sample of 288 family firms during the 6-year period, from 2009 to 2014. The sample is drawn from domestic private companies belonging to non-financial services sector included in the NSE CNX 500 index. We find that family CEO has no significant association with firm value, when the family is not the majority shareholder. Family shareholding has positive relationship with firm value, but does not moderate the relationship of family CEO with firm value. We show that family CEO and firm value are negatively related when the family does not hold majority equity stake in the family firm. While family shareholding has no significant relationship with firm value, it has a negative interaction effect on the relationship between family CEO and firm value. The research findings have important implications for family firms as well as the nonfamily investors in the family firms.