Family Board Members Research Articles

Corporate tax avoidance and narrative disclosure tone: a developing country perspective

Purpose This study aims to examine the link between tax avoidance, corporate governance and narrative disclosure tone using a sample of public companies in Pakistan. Design/methodology/approach Data for 125 companies listed on the Pakistan Stock Exchange (PSX) are collected over 10 years from 2011 to 2020. Sentiment analysis is conducted to determine the disclosure tone, and regression analysis is used to test the association between the variables. Findings This paper finds that firms that engage in tax avoidance tend to use a more positive disclosure tone and are more likely to engage in impression management. Moreover, promoting sound governance through board independence and gender diversity is associated with a less positive disclosure tone. However, firms with more family board members and higher foreign ownership are more likely to use a more positive disclosure tone. Practical implications Regulators can use this information to develop better guidelines to protect investors and ensure faithful disclosures to address both positive and negative news. Originality/value The study contributes to the literature by examining corporate tax avoidance as a determinant of narrative disclosure tone, a relationship that has not been widely explored. Moreover, as most disclosure tone research has been conducted in developed countries, this paper provides valuable evidence from a developing country.

Does female board directorship affect the quality of KPI voluntary disclosure? Some evidence from French family firms

Purpose This paper aims to examine the impact of female board directorship on the quality of key performance indicators voluntary disclosure (hereafter QKPI). Further, this paper explores whether the presence of family board members mitigates the female directors’ effect on the QKPI. Design/methodology/approach This study explores closely held family firms listed on the CAC All-Tradable during 2015–2022. Findings The initial findings provide consistent evidence indicating a positive association between female board directorship and the QKPI. However, testing for the moderating effect of family board members on the linkage between female representation in the company’s boardroom and the QKPI reveals a negative relation. Originality/value This study focuses on gender equality in French-listed companies, a topic that has received little attention from researchers. The country and the period considered in this paper are noteworthy characteristics that enhance the value of this research. This study sheds light on issues concerning the 2016 law that requires quotas for women on boards of directors in French firms.

Robot adoption of family firms: the role of family non-executive directors

PurposeIndustrial robots are of great significance to the long-term development of family firms. Drawing on the lens of the principal–principal conflict, this paper aims to investigate the influence of family non-executive directors on robot adoption in Chinese family firms.Design/methodology/approachThis paper selects the family firms in China from 2011 to 2019 as the sample. Furthermore, the authors manually collected the family non-executive directors and constructed the robot adoption variable utilizing data sourced from the International Federation of Robotics. In brief, this paper constructs a comprehensive framework of the mechanisms and additional tests pertaining to the influence of family non-executive directors on robot adoption.FindingsThis paper finds that family non-executive directors can promote robot adoption in family firms. The underlying mechanism analysis shows that family non-executive directors promote robot adoption by exerting financial and human effects. This paper further finds that the characteristics of family non-executive directors, such as kinship, differential shareholding and excessive directors, affect the role of family non-executive directors. Finally, robot adoption can improve future performance, and the promotional effect is more evident when family members are non-executive directors.Originality/valueThis paper contributes to the related literature from the following two aspects. Firstly, this paper decomposes the types of family directors to understand the role of family non-executive directors, which challenges the assumption that family board members are homogeneous in family firms. Second, this paper expands the research on the factors that influence robot adoption in emerging economies from the micro-enterprise level. In addition, the findings in this paper have managerial implications for family firms to optimize their strategic decisions with the help of the mode of board right allocation.

The Impact of Family Firms and Supervisory Boards on Corporate Environmental Quality

This paper examines the impact of family ownership and supervisory board characteristics on carbon emission disclosure. It uses balanced panel data and a matched-pair design of 124 non-financial firms listed on the Indonesia Stock Exchange from 2017 to 2019. This study finds that family firms and larger boards improve, while female board members harm carbon emission performance. Further analyses reveal non-linear relationships between family ownership and carbon performance. When control rights are limited, family firms prioritize controlling managers and improving carbon quality. Conversely, they prioritize personal objectives over environmental concerns when there are high control rights, resulting in decreased carbon emission performance. Additionally, family board members generate more carbon information, indicating the family owners effectively utilize their position on the supervisory boards to influence the company’s carbon emission performance. Finally, the study reports that more faculty member boards seem to hurt carbon emission reduction efforts. This result suggests that the diversity of their professional experiences does not affect the environmental effectiveness of supervisory boards. Our findings highlight the importance of understanding SEW principles and their connection to families in comprehending Indonesian corporate carbon emissions disclosures. The findings of this study enrich the worldwide literature by exploring the potential benefits of family business environmental performance. This study also adds to the literature on corporate governance, especially the role played by supervisory boards. Our findings align with the resource dependence theory, emphasizing the central function of supervisory boards as a monitoring tool. This study is constrained by its reliance on carbon emission data extracted from the annual reports of public firms, with a particular emphasis on pre-COVID-19 data. Future research should focus on sustainability reports and explore the time frame encompassing COVID-19 (2020–2022 datasets) to determine any differences in the findings.

SMEs fintech financing: does board governance matter?

The purpose of this study is to examine the board governance factors that influence a small and medium enterprise’s (SME’s) decision toward fintech financing. A structured questionnaire survey of 90 Malaysian SMEs was used and the data analyzed using the Heckman selection model and the marginal effect model. The results demonstrate that SMEs’ female board members, family board members, and the duality of their CEOs have a significant influence on their decision to obtain financing from fintech platforms. Professional services provided by experts have a negative influence on their decisions to engage in fintech financing. The SMEs’ board size, the length of their chairmen’s service, and non-family board members are negatively related to their decisions to apply for financing. The more male members that were on the board, the more likely the SME was to choose to apply for external financing during the survey year.

Impact of family board members and CEO’s business education on the investment in information technology

Impact of family board members and CEO’s business education on the investment in information technology

Impact of family board members and CEO's business education on the investment in information technology

Impact of family board members and CEO's business education on the investment in information technology

Karakter CEO, Family Board Members, dan Internasionalisasi Perusahaan Keluarga yang Terdaftar di BEI

The purpose of this research is to examine the influence of the CEO Characteristics and family board members on a family firms internationalization listed on the Indonesia Stock Exchange. This research is using multiple linear regression model, the data is acquired from report finance company published from period 2011-2016. Dependent variables used is internationalization proxied with foreign sales to total sales. Independent variables in this research are education level of the CEO, Gender of the CEO, family board member of commissioner and family board member of director. The results of this research shows that the education level of the CEO has a positif effect on internationalization, the CEO's gender is not significant to internationalization, while the family board member of commissioners and family board member of director are negatifly afflicted against internationalization.

Characteristics of CEO, Family Board Members and Internationalization of Family Companies Listed on the IDX

The purpose of this research is to examine the influence of the CEO Characteristics and family board member on a family firms internationalization listed on the Indonesia Stock Exchange. This research is using multiple linear regression model, the data is acquired from report finance company published from period 2011-2016. Dependent variables used is internationalization proxied with foreign sales to total sales. Independent variables in this research are education level of the CEO, Gender of the CEO, family board member of commissioner and family board member of director. The result of this research shows that the education level of the CEO has a positive effect on internationalization, the CEO's gender is not significant to internationalization, while the family board member of com-missioners and family board member of director are negatively afflicted against internationalization.

Royal family board directors and the level of ESG disclosures in GCC listed firms

PurposeThis study aims to examine the role of royal family members’ board of directors, as a specific aspect of corporate governance, on the firm’s environmental, social and governance (ESG) disclosures. Many firms in the world enjoy special political connections, benefit from tax exemptions and favorable treatments that are largely responsible for their economic endurance and strong performance.Design/methodology/approachThe authors collect data from Thomson Reuters database on Gulf Cooperation Council (GCC)-listed firms for 2010–2018. Royal family board directors’ data is manually collected using a systematic approach to ensure accuracy. Fixed effects’ panel regression model is used to estimate relationships. The authors interact variables to test the moderating effect of board independence and sustainability committee on the influence of royal family board directors.FindingsThis study finds that royal family directors on GCC boards negotiate fewer ESG reporting in firms. While board independence, board gender diversity, sustainability committee and governance committee increase the level of ESG-disclosures in the traditional way of reducing agency costs to stakeholders, this study finds that royal family board members convey beneficial consequences on firms without perceiving the need to disclose their ESG activities. Additionally, these firms do not show a spillover effect from the royal family members on the board’s independence or the existence of a sustainability committee; rather these members use a different channel for protecting and building the business value. These results are robust with respect to controls for company size, leverage, return on assets and growth. Instrumental variables are then introduced in the analysis to perform a sensitivity test.Originality/valueThe study results indicate the need to improve GCC market transparency over supplementary limitations that exist on their corporate governance condition. This may be consequential to regulators, lenders and investors. The results suggest the need to raise awareness of the importance of governance and balancing firms’ financial and social performance in the presence of royal family board directors. Policymakers and governance agencies are responsible for promoting the importance of forming sustainability committees and having a set of performance indicators that measure the effectiveness of their actions.

An alignment effect of concentrated and family ownership on carbon emission performance: The case of Indonesia

This study considers the effect of ownership characteristics on carbon emission disclosures using balanced panel data and a matched-pair design of 124 annual reports of non-financial firms listed on the Indonesia Stock Exchange (IDX) during 2017–2019. The main result from multivariate analysis reveals that firms with concentrated and family ownership tend to disclose more carbon emission information. This finding suggests that the stewardship qualities of concentrated and family-controlled entities align with carbon emission accountability and strategies to reduce emissions. Our additional analyses show that firms with family board members generate more carbon emission information. Finally, the analysis of nonlinear relationships confirms both monitoring and expropriation effects of family ownership on carbon emission performance. Therefore, the results of this study suggest that considerable work is needed for all non-financial listing firms to specify emission reduction targets and target years, quantify emission reductions and associated costs or savings, and factor costs of future emissions into capital expenditure planning. This study makes a valuable contribution to the family business and carbon emissions, a contribution of considerable interest to a broad interdisciplinary audience, including family business owners, managers, governments, and academics.

CEO power, innovative investment and family board involvement: An empirical study of Chinese family SMEs

Drawn the socio-emotional wealth perspective, this paper investigates the relationship among CEO power, innovative investment and family board involvement in family enterprises. Secondary data on listed Chinese family small- and medium-sized enterprises from 2015 to 2019 was accessed via the China Stock Market and Accounting Research database and analysed using hierarchical multiple regression. The findings suggest a significant positive effect of CEO power on innovative investment in Chinese family SMEs. This study also found the moderating effect of family board involvement could inhibit the positive relationship between CEO power and family SMEs’ innovativeinvestment. Further, compared with hiring external professional managers as CEO, the inhibitory moderating effect of family board involvement is more significant when a family member is appointed as a CEO in family SMEs. In order to better adapt to the increasingly competitive market environment, the findings of this paper suggest that internal family board members should appropriately reduce their influence on the CEO power to stimulate Chinese family SMEs to conduct more innovative investment for their long-term prosperity.

Politically Connected Firms and Forward-Looking Disclosure in the Era of Oman Vision 2040

Oman Vision 2040 is the blueprint for Oman’s future aspirations. This vision is set with a number of high-level long-term targets to reflect the desired progress towards the strategic goals, in order to direct all Omani companies to build productive strategies and innovative plans to diversify the country’s economy and reduce the dependence on the oil sector. All Omani companies are required to move according to this path by disclosing forward-looking information and goals in their annual reports. The progress will be monitored by the Vision 2040 Follow Up Unit which will report regularly on the targets. Therefore, our paper examines whether the presence of ruling family members on boards of directors impacts the quality and tone of forward-looking disclosure (FLD). Based on the sample of 34 Omani financial listed firms on Muscat Stock Exchange between 2014 and 2020, we found that there is a positive and significant association between politically connected firms and FLD quality. This confirms prior literature that politically connected firms are considered more transparent than their non-connected peers. We also found that firms with ruling family board members disclose more good forward-looking news in the chairman’s statements. Furthermore, in the case of poor financial performance firms, we found that ruling members tend to disclose more good news than bad news, and they could use impression management techniques to avoid the negative attraction and to maintain their reputation in the market. From these findings, we draw important implications for policymakers and shareholders who need to encourage firms to appoint ruling family directors on their boards (to a specific extent) due to the potential beneficial outcomes they deliver.

Non-family employee strategic renewal in family firms: the transformational leadership role of family board members and psychological ownership

PurposeThe study aims to reveal the strategic renewal (SR) of non-family employees in family small and medium enterprises (SMEs) with the effects of transformational board member leadership and psychological ownership (PO) dimensions.Design/methodology/approachNon-family employees at 82 export and import family firms (FFs) in Vietnam were selected for the study, which used a partial least square structural equation modelling (PLS-SEM) approach.FindingsFamily board members with transformational leadership (TL) qualities and PO play an essential role in developing non-family employee SR.Originality/valueThe authors grant advanced family roles and relationships knowledge to the renewal and transformation of FFs' strategies and organisational structures.

Family Control and Corporate Innovation in Stakeholder-Oriented Corporate Governance

This study investigates the effects of family control on corporate innovation activity in publicly traded firms in Japan under stakeholder-oriented corporate governance. In a sample of 14,991 firm-year observations in publicly traded firms in Japan during the period 2007 to 2016, we tested whether family owners or board members are enhancing research and development investments. While theoretical perspectives of principal–principal conflicts generally assume a negative relationship between family control and research and development intensity, we find a positive relationship, which supports the stewardship theory perspective. Additionally, we find that main bank ownership positively moderates the relationship between family control and research and development, suggesting that the main bank could affect the decision-making of family board members in the long-term. This result is supported by the close relationships between the main bank and client firms. Furthermore, our study reveals that the shareholder orientation of foreign shareholders suppresses family board members’ long-term orientation. We conclude that the exploitation presumed by principal–principal conflict perspectives has not been thoroughly investigated in Japan’s stakeholder-oriented corporate governance system.

Does Corporate Governance Enhance Bank Efficiency in Taiwan

The purpose of this study is to investigate the relationship between bank efficiency and corporate governance in Taiwan. It aims to explain the effects of ownership structure, institutional investors' structure and manager turnover. The empirical results provide weak evidence to support the proposition that independent directors can improve bank efficiency. This study broke down the structure of institutional investors and found that when a higher percentage of banks were owned by domestic corporations, the efficiency-augmentation hypothesis was supported, whereas when a higher percentage of banks were owned by domestic trust funds, the efficiency-abatement hypothesis was supported. This study also found that in the Taiwanese banking industry in general, top executives of poorly performing banks are not more likely to lose their jobs and that, sometimes, boards did not appoint top executives based on ability but rather tended to appoint them based on the personal preferences of family board members.

The role of human capital on family firm innovativeness: the strategic leadership role of family board members

Drawing on the resource-based view of the firm, this study investigates the relationship between human capital (employees’ experience, knowledge and technical skills, managerial talent) and innovativeness (propensity to innovate) in a sample of 478 family firms taken from a cross-country dataset (STEP Project). Furthermore, we consider the moderating effect of the proportion of family members sitting on the board of directors (family board ratio). The main findings highlight that there is a positive relationship between human capital and family firm innovativeness. Moreover, family board ratio positively moderates the relationship between human capital and innovativeness in such a way that when the family board ratio is high, the relationship between human capital and innovativeness is stronger. This result is weaker when multiple family generations are actively involved in the firm. In summary, family members sitting on the board of directors focus more attention on people and for this reason, play an important strategic leadership role in valorizing human capital that fosters more innovativeness.

They Are Not All the Same! Investigating the Effect of Executive versus Non‐executive Family Board Members on Firm Performance

Drawing on faultlines and challenging the assumption that family board members form a homogenous subgroup, we hypothesize that the distinction between executive and non‐executive family board members can create faultlines that affect firm performance. We propose that the discrepancy between results and goals can activate and exacerbate faultlines. Using a sample of 421 family small and medium‐sized enterprises (SMEs), we find a U‐shaped relationship between the ratio of family executive board members and firm performance showing the consequences of relationship‐based and task‐related faultlines. Moreover, we find that the U‐shaped relationship occurs when firms perceive that they under‐achieve their objectives, whereas a reverse J‐shaped relationship appears when firms over‐achieve their objectives.

Family control and ownership monitoring in Stakeholder-oriented corporate governance

PurposePrincipal–principal conflicts between family shareholders and other shareholders have been investigated in emerging economies, but fewer studies have examined the effect of concentrated ownership on firm profitability and dividend payout in stakeholder-oriented systems. The purpose of this paper is to examine whether family control leads to principal–principal conflicts resulting in wealth expropriation of minority shareholders by family owners in stakeholder-oriented systems.Design/methodology/approachThis study uses large listed firms of the Tokyo Stock Exchange (TSE) in Japan during 2007–2016. Using 14,991 firm year observations, the authors analyze the effect of family control on dividend payout and firm performance to test the possibility of exploitation by family owners.FindingsThe authors find that family board members do not exploit minority shareholders and rather behave as stewards of the firm. The authors also find that foreign shareholders interact with family control to increase firm profitability, suggesting that foreign shareholders enhance the role of family board members as stewards.Originality/valueExisting research on principal–principal conflicts tends to examine expropriation by family board members in emerging markets. This research reveals that family board members behave like stewards in the presence of stakeholder-oriented corporate governance mechanisms. In addition, foreign shareholders strengthen the stewardship role of family controlled firms.

Family board ownership, generational involvement and performance in family SMEs

PurposeIn order to deepen our knowledge of governance of family firms, the purpose of this paper is to focus our attention on the relation between family owners who are members of the board of directors and firm performance. Also, this study sheds more light on how the generation in charge of the family firm affects that relationship, as generational involvement may be a unique predictor of governance behavior in these firms.Design/methodology/approachThe authors applied a cross-sectional ordinary least squares regression model to test the hypotheses on a sample of 313 non-listed Spanish family SMEs. The authors suggest the possibility of a non-linear relationship between the percentage of ownership by family members of the board of directors and firm performance, and specifically, the authors propose an S-shaped effect that implies two breakpoints.FindingsThe authors find not only that an inverted U-shaped relationship exists, but also an S-shaped relationship between family board members’ ownership and firm performance in family SMEs. Nevertheless, the results are different in comparing first-, second- and later-generation family firms.Originality/valueThis is one of the few empirical studies that examine the relationship between family board ownership and firm performance in the context of non-listed family SMEs. The authors consider that the influences of family directors on the board of directors as well as the concentration of family ownership on the board of directors are worth studying in non-listed family SMEs. Moreover, previous studies have focused mainly on large listed family firms but not on unlisted ones.