Achieving Governance Disclosure – the Surprising Case of an Emerging Market Family Business

Abstract

Since 1961, when the first paper to clearly recognize and study family firms was published, the business literature has seen an increasing trend in the number of articles relating to family firms. One reason why interest in this field has grown may be because family-owned firms do not behave as expected by the predominant theoretical framework. Family-ownership has been shown to be unique in its effect on the firm when compared to other firm ownership structures. Such divergent behavior is disconcerting, knowing that, globally, family firms may be the most common firm structure. Governance is one of the largest streams of research within the family business literature. Regrettably, most research on family businesses is focused on Western developed economies suggesting that theory building when it comes to family business governance has been largely driven by the Anglo-Saxon corporate governance model. This is unfortunate because we know that context plays a vital role in governance outcomes and in family firm behavior. One of the important challenges faced by developing countries is governance disclosure, with potentially grave repercussions for their economic futures. The aim of this research is to help understand the motivations behind the decision of a family, non-listed firm, in a developing country context, to disclose governance information on its board members. We propose a larger role for institutional isomorphism at the intersection of the family, governance, disclosure, and developing country literatures. To this end, we identified a family business in the emerging market of Lebanon that has demonstrated this phenomenon. Despite the odds, this firm was able to overcome multiple challenges - family firm structure, secretive culture, no legal requirements, information sensitivity - to ultimately share this information with the public. Our case study helps us suggest a context-specific governance disclosure model based on the institutional theoretical framework.