Board of directors characteristics and performance in family firms and under the crisis

Abstract

PurposeThis paper aims to examine the relationship between board of directors’ characteristics and performance in family businesses. It offers evidence to the question of whether a family firm (FF) differs from a non-family firm and looks at the possibility of asymmetrical effects between periods of stability and economic adversity.Design/methodology/approachA panel data approach was applied to a sample of Portuguese firms listed the on Euronext Lisbon exchange between 2002 and 2013.FindingsThe results show that FFs are likely to have a lower proportion of independent members and higher gender diversity on their boards than non-family firms. FF performance is positively related to ownership concentration and gender diversity. There are performance premiums for family businesses, which have more gender diversity than their counterparts. These effects also depend on whether the economy is in recession. The evidence suggests that the presence of women on the board and the leverage and size of the FFs have a more significant impact on the performance in periods of economic adversity.Research limitations/implicationsOne limitation of this study is the small size of the sample as it was drawn from the Euronext Lisbon exchange, a small stock exchange market.Originality/valueThis study provides input into the academic discussion on corporate governance and FF, an area which is in need of research. In addition, the authors examine this issue in conjunction with generalised economic adversity, focusing on the possible asymmetrical effects that the nature of the board of directors may have on performance in periods of stability and those of economic adversity. The role of board of directors is crucial to the understanding of corporate behaviour and the setting of the policy that regulates corporate activities.