Impact Of Family Ownership Research Articles

The impact of family ownership on the relationship between the existence of the woman Board of Commissioners and firm performance

Purpose: The primary purpose of this study is to see the impact of the presence of a woman board of commissioners (WBoC) on firm performance (FP). In addition, this study looked at the effect of moderation of family ownership (FO) on the influence of WBoC on FP.Design/methodology/approach: This study used secondary data with a sample of all companies listed on the Indonesia Stock Exchange from 2017 to 2021. The study used a total of 788 observations. The data were analyzed using moderate regression analysis with unbalanced panel data.Findings: The results revealed that WBoC did not affect TQ and ROA. Empirical research shows that FO strengthens WBoC in increasing ROA and TQ.Research limitations/implications: In Indonesia, the portion of the representation of each company's woman board of commissioners is only one member on average at 78%. As many as 22% of companies with a board of commissioners are more or equal to 2 members.Practical implications: This study also serves as a guide for shareholders in selecting competent woman boards of commissioners for an effective supervisory system that drives the company's success.Originality/value: This study analyzes the impact of share ownership dominated by family companies on the relationship between the existence of a woman board of commissioners and firm performance. Therefore, this research is significant to understand the role of FO in helping women build leadership, gain recognition, and be empowered to improve firm performance.

The Impact of Family Ownership - Does it Pay for Family Firms to Mitigate Carbon Emissions?

The Impact of Family Ownership - Does it Pay for Family Firms to Mitigate Carbon Emissions?

Does family ownership matter? Evidence of the payment method and market reaction to M&A deals in Taiwan

PurposeThis paper aims to examine the effect of family ownership on the payment method of mergers and acquisitions (M&A) deals. It also investigates the market reaction around the announcement of these M&A deals.Design/methodology/approachArchival data of M&A deals of a sample of Taiwanese listed firms during 2008–2018 are collected and examined using probit, event study and OLS models. This study addresses the endogeneity concern using the two-stage least squares statistical technique and Heckman’s two-step estimation method.FindingsThis study finds that family firms are more likely to use cash as an exchange medium in M&A deals to avoid the problem of diluting control rights. This study further finds that family firms receive a positive market reaction around the announcement of M&A deals relative to non-family counterparts. The empirical results support the notion that family ownership is a value-creation structure.Practical implicationsThe findings provide additional evidence-based insights into the debate about family ownership with the aim of informing policy and offering practical recommendations to expand the US-based literature.Originality/valueTo the best of the authors’ knowledge, this is the first study to provide empirical evidence on the impact of family ownership on payment method choice in M&A activities in Taiwan. It also provides novel evidence that family firms experience value gains when taking M&A investment decisions relative to non-family firms.

Family ownership and capital structure: evidence from ASEAN countries

PurposeThis paper examines the capital structure decisions of family firms in Southeast Asian (ASEAN) countries, considering the moderating effects of various firm-level and country-level factors.Design/methodology/approachThe authors apply various panel data models to analyze the data of listed firms in six ASEAN countries over the period of 2007–2017.FindingsThe authors find that family firms tend to use more debt, particularly short-term debt, than non-family firms, which is explained by family owners' concern about the risk of losing control. The authors further document that family firms would use more debt when they have lower ownership concentration, have more family members on the board of directors and are young firms. The authors also find that the impact of family ownership on capital structure is moderated by the level of investors' legal protection of a country.Originality/valueThis study, for the first time, provides comprehensive analyses of the financing decisions of family firms in ASEAN using a unique hand-collected dataset, which highlights that regional culture and market conditions can shape family firms' financing decisions. The authors also manage to mitigate the endogeneity issues that pervade most research on family firms. In addition, this research further explores the heterogeneous impacts of family control on capital structure given different levels of board involvement, firm age, ownership concentration, and most importantly, institutional differences. Such insights provide useful information for prospective investors as well as regulators to make more efficient investment and legislative decisions.

How does family ownership and management influence green innovation of family firms: evidence from China

PurposeBased on the socio-emotional wealth and agency theories, this study empirically investigates the impact of family ownership and management on green innovation (GI) in family businesses, as well as the moderating effects of institutional environmental support factors, namely, the technological achievement marketisation index and the market-rule-of law index.Design/methodology/approachThis study empirically tests the hypotheses based on a sample of listed Chinese family companies with A-shares in 14 heavily polluting industries from 2009 to 2019.FindingsThere is a U-shaped relationship between the percentage of family ownership and GI, and an inverted U-shaped relationship between the degree of family management and GI. Additionally, different institutional environmental support factors affect these relationships in different ways. As the technological achievement marketisation index increases, the U-shaped relationship between the percentage of family ownership and GI becomes steeper, while the inverted U-shaped relationship between the degree of family management and GI becomes smoother. The market rule-of-law index weakens the U-shaped relationship between family ownership and GI.Originality/valueFirst, the authors enrich the research on the driving factors of GI from the perspective of the most essential heterogeneity of family businesses. This study shows nonlinear and opposite effects of family ownership and management on GI in family firms. Second, this study contributes to the literature on family firm innovation. GI, not considered by researchers, is regarded as an important deficiency in research on innovation in family businesses. Therefore, this study fills that gap. Third, the study expands research on moderating effects in the literature on GI from the perspective of institutional environmental support factors.

Whether family ownership affects the relationship between CSR and EM: evidence from Chinese listed firms

PurposeThis study explores the relationship between corporate social responsibility (CSR) and earnings management (EM) in China and whether family ownership impacts this relationship.Design/methodology/approachThe research data are the financial reports and CSR disclosure reports of Chinese listed companies from the CSMAR database for the 2010–2020 period. Ordinary least squares (OLS) regression was used to analyze the relationship between various variables in this study.FindingsResults show that CSR significantly and positively affects accrual-based EM (AEM) but does not affect real EM (REM). Moreover, family ownership influences the positive relationship between CSR and AEM. Compared with non-family enterprises, family enterprises tend to disclose less CSR performance but also have lower AEM behavior.Originality/valueThis result is related to the information transparency of listed enterprises and Socioemotional Wealth theory. This study provides reference for domestic and foreign investors and other stakeholders in understanding the impact of family ownership on the relationship between CSR and earnings management to optimize their investment decisions.

The impact of family ownership on firm performance: A study on Vietnam

The impact of family ownership on firm performance: A study on Vietnam

Impact of family ownership, management, and generations on IPO underpricing and long-run performance

This paper examines the impact of family ownership, management, and generations on IPO underpricing and the long-run performance of publicly listed firms in Indonesia from 2004 to 2015. This study is based on agency theory, which discusses the relationship between shareholders and management, as well as controlling and non-controlling shareholders. Study results show that IPO underpricing was 28% higher for family firms than non-family firms. Among family firms, a family member’s presence as a Chief Executive Officer (CEO) significantly reduced the level of IPO underpricing. A negative relationship between family CEO and IPO underpricing was only observed if a CEO at the time of IPO was the founder instead of family descendants. A long-run return of family-firm IPOs was more likely to underperform their non-family-firm counterparts. The findings in the primary market suggest that investors predict bigger issues of agency conflicts between controlling and non-controlling shareholders in family firms than the issues of agency conflicts between shareholders and management in non-family firms. Since investors consider family-firm IPOs to be riskier than non-family firms, they demand a higher level of IPO underpricing to compensate for such risks. The results in the secondary market confirm the findings in the primary market.

The Impact of Family Ownership on Quality and Disclosure of Internal Control in Pakistan

The role of family owners in the internal control environment is characterized by contradictory theoretical arguments i.e., entrenchment and alignment behavior. Therefore, the objective of this study is to investigate the behavior exhibited by family owners concerning the internal control environment in an underdeveloped regulatory setting. The study collected both primary and secondary data to use a multivariate regression research design to investigate the impact of family owners and CEOs on the internal control quality and disclosure of enterprises. The results of the current study demonstrated that family owners and family CEO have a negative impact on the internal control quality and disclosure, which validates the entrenchment behavior exhibited by family owners in the Pakistani setting. The results of the current study imply that policymakers should promote strict policy initiatives regarding the effectiveness of internal controls and their reporting so that companies are compelled to have better engagement in internal control practices for the protection of minority shareholders.

The Impact of Family Ownership on the Capital Structure of Palestinian Firms

Purpose: This study aims to examine the impact of family ownership on the capital structure with control variables that have been found to affect the capital structure demonstrated in previous studies in the context of the Palestinian market. Design/Methodology/Approach: Panel data (unbalanced) was used to sample non-financial firms listed in the stock exchange from 2010 to 2018. Regression with Driscoll-Kraay standard errors was used to address serial correlation and heteroscedasticity issues and possibly correlate between the groups (panels). Findings: The findings from the T-tests showed that family firms were less leveraged, less in the concentration of ownership, and lesser in their size compared to non-family firm counterparts but were more profitable than non-family firms. Furthermore, regression analysis results showed that the impact of family ownership negatively and significantly affected debt usage in the capital structure (book value of debt). The capital structure (market value of debt) was also positively and significantly affected. Practical Implications: Findings of the study help investors and lenders in the Palestinian market to understand how family firms behave toward employing debt in the capital structure. This may be important in the context of the Palestinian market as family ownership is considered a leading player in ownership structure. Originality/Value: Former studies have focused majorly on the effect of ownership structure on the firm’s performance. The impact of ownership structure on the capital structure received less attention in general and particularly family ownership. To our best knowledge, the current empirical research is the first to analyze the resolutions of the capital structure of family companies.

Current Year Audit Opinion and Next Year Audit Fees: Does Family Ownership Matter?

The paper aims to investigate the association between current year audit opinion and the pricing of the next year audit mission and whether this relationship differs with different nature of ownership (family – non-family) in the Egyptian setting. Using a sample of 358 firm-year observations from the Egyptian Stock Exchange (EGX hereafter) over the period 2016-2019, ordinary least square (OLS) regression models are estimated to test the research hypotheses and conduct sensitivity and additional analyses. The author didn’t find significant association between current year audit opinion and next year audit fees. However, if the auditor issues a qualified audit opinion for a family firm, he will ask for a fee premium for the next year audit mission. Results are robust to alternative measures of next year audit fees and current year audit opinion. The paper uses the current year audit opinion as an input to the next yearaudit pricing decision. The paper responds to previous calls to investigate the relationship between audit fees and type of audit opinion and the impact of family ownership on audit fees. In addition, this study uses three alternative measures of next year audit fees and an alternative measure of current year audit opinion. Finally, this study adds evidence to the corporate governance literature in developing countries.

Exploring the role of family ownership in internationalization: empirical investigation of Indian firms

PurposeInternationalization is an important strategy for the long-term survivability of the firms and is often influenced by the ownership groups along with the family involvement in the management decisions. The purpose of this study is to investigate empirically the outward propensities of various ownership groups such as foreign institutional investors, domestic mutual funds and lending institutions.Design/methodology/approachThis paper analyzes the moderating effects of the family’s influence on the relationship between various ownership categories and internationalization, which is measured in terms of foreign investments and export intensity. An analysis of listed non-financial Indian firms recorded during the years 2005–2019, constituting a panel of 43,928 firm-year observations was conducted by using the tobit and probit panel regression models.FindingsThe results demonstrate that internationalization of the firm is positively impacted by the foreign institutional investors and lending institutions. However, when the family ownership is moderated across the ownership categories, it can be seen that it negatively impacts the lending institutions and positively impacts the foreign institutional investors. In the case of mutual funds, no impact of family ownership in the firm’s foreign investment decisions can be seen.Originality/valueAs there are limited studies about family ownership influence on the firm’s internationalization decision in the context of India, this paper takes an inclusive approach to the changing nature of the influence of ownership on the international expansion process.

Impact of family ownership and board gender diversity on financial disclosure: evidence from an emerging country

Impact of family ownership and board gender diversity on financial disclosure: evidence from an emerging country

Impact of Family Ownership on Organizational Performance With the Moderating Role of Active Versus Passive Control: A Case of Pakistan’s Private Sector

Most of the businesses operations in the world are governed typically by a family or a government and in some other situations, sole person regulates the operations of several firms beneath a single umbrella. The main purpose of the study is to examine the association between ownership structure of the business and its performance. The sample of the study is based on 100 companies listed in KSA (Karachi stock Exchange). The data was gathered from secondary sources of financial reports of firm and the time period is based on 9 years from 2005 to 2013. Financial performance of the firm is calculated through the accounting based methods like as several ratios of Return on asset, Net Profit Margin, Return on Equity, Financial Leverage, Tobin’s Q and Earning per share. Several statistical tools (e,g Correlation, reliability, regression analysis and t-test) are used to measure the results on SPSS. Active and passive controls are used as moderator in the study. According to the result it is concluded that all hypothesis are accepted. Similarly, a significant difference is existed in firm performance under active and passive control. This study is very helpful for the investors and the business owners of family owned firms.

Evidence on Family Firm Performance and Relevance of Context in an Emerging Economy

Ownership of firms and their impact on firm performance has been a topic of interest for long. Concentrated ownership of a firm in the hands of a family presents unique opportunities and challenges that may have an impact on the performance of the firm. Multiple studies have arrived at differing conclusions with regards to performance of family firms. Using a unique proprietary database of scientifically classified listed family and non-family firms this paper studies the impact of family ownership, control and management on firm performance through the lens of external and internal context. It thus advances the debate that has so far been skewed towards studies from the developed markets, larger firms and micro analysis. Using accounting and market measures of firm performance, we conduct a time-series cross-sectional comparison of family and non-family firms. Our analyses consistently reveal that family firms performed poorly in comparison to non-family firms in India. We also find that the impact of family does not weaken over time and that family management results in poorer performance. We, therefore, conclude that family ownership, control and managementm per se are a significant impediment to firm performance in emerging markets contexts like India.

Corporate Social Responsibility and Earnings Management: The Moderating Role of Family Ownership

This study aims to explore the impact of family ownership on the relationship among corporate social responsibility (CSR) and earning management (EM) in Pakistan. Data is collected from nonfinancial listed firms on Pakistan Stock Exchange (PSE) for the period 2009-2017. Our results of pooled ordinary least square regression indicate that CSR has significant negative impact on EM. Furthermore, results also indicate that association between CSR and EM is moderated by family ownership. Family firms which perform CSR activities are less involved in EM as compare to nonfamily firms perform CSR activities. This variation in behavior of EM in family and non-family firms can possibly be explained by socioemotional wealth theory. Keywords: Corporate Social Responsibility, Earnings Management, Family Ownership

Ownership Heterogeneity and Innovation:Hedge Fund Activism in Family Firms

This study analyzes the impact of ownership heterogeneity on corporate innovation strategy. Acknowledging the increasingly heterogeneous ownership landscape characterized by influential shareholders with diverging preferences we show that novel theoretical models provide a valuable guiding framework for corporate governance models. Contrary to previous research, we find that the effect of shareholder activism exercised by hedge funds on innovation is not unconditionally positive but depends on the ownership configuration. In this context, the impact of family ownership on innovation is theoretically ambiguous due to conflicting preferences. Our findings confirm our theoretical argumentation based on principal-principal theory and myopic loss aversion that conflicts between two influential principals (i.e., family owners and hedge funds) can lead to detrimental outcomes with regards to radical innovation.

The impact of family ownership on establishment and ownership modes in foreign direct investment: The moderating role of corruption in host countries

Research Summary: In this study, we adopt a socioemotional wealth perspective to examine the influence of family ownership on foreign direct investment. When establishing foreign subsidiaries, firms with greater degrees of family ownership are more likely to engage in greenfield investment and full equity ownership in order to maintain family owners’ socioemotional wealth. Additionally, these relationships are more pronounced in countries with higher levels of corruption. In corrupt countries, greater control over foreign subsidiaries is necessary to restrict their corrupt behaviors, which can seriously damage the firm’s socioemotional wealth and destroy the reputation of the family owners. By using a dataset of foreign market entries by Japanese listed firms in the electronic machinery industry, we find general support for our hypotheses.Managerial Summary: We find evidence that Japanese listed electronic machinery manufacturers with larger family ownership are more likely to choose greenfield investment and full ownership when entering foreign countries. This result suggests that family owners prefer to maintain strong control on local subsidiaries, possibly for preserving their socioemotional wealth. Additionally, this tendency of family firms’ regarding the choice of greenfield investment is stronger when they enter countries with higher levels of corruption. Managers and investors of family firms might need to pay attention to family owners’ entry mode choices, which could be incentivized excessively for the preservation of socioemotional wealth, possibly at the expense of economic wealth.

The impact of family ownership on capital structure of firms: Exploring the role of zero-leverage, size, location and the global financial crisis

In this article, we investigate the influence of family ownership on firm leverage across different subgroups of family and non-family firms. In addition, we examine the influence of firm size, geographical location and the 2008 global financial crisis on the capital structure of family firms. In both cases, we study the probability of firms using debt and, conditional on its use, the proportion of debt issued. We find that family ownership affects both decisions positively, namely, when the firm is large or located in a metropolitan area. For small firms located outside metropolitan areas, there is no clear family ownership effect. We also find the 2008 crisis had a substantial, but diversified, impact on family firm leverage. On the one hand, all family firms were more prone to use debt after 2008; on the other, the proportion of debt held by levered family firms decreased for micro and small firms, but increased for large firms. Overall, the crisis effects on family firm leverage seem to be the result of both supply- and demand-side factors, with the former particularly affecting the availability of debt to micro and small firms.

Founding family and auditor choice: Evidence from Taiwan

AbstractManuscript TypeEmpiricalResearch Question/IssueFrom an agency perspective, we investigate whether family ownership and control configurations are systematically associated with a firm's choice of auditor. Our analysis focuses on three different characteristics of family ownership and control: family ownership (cash flow rights), disparity between cash flow and voting rights held by family owners (cash–vote divergence), and the family identities of CEOs.Research Findings/InsightsOur findings suggest that different family ownership and control configurations lead to different agency effects. The alignment effect prevails in family firms with greater family ownership, founder CEOs, and professional CEOs, whereas the entrenchment effect prevails when there is greater cash–vote divergence. Despite the presence of two distinct types of agency effects, regardless of differences in family ownership and control configurations, none of these firms is inclined to appoint higher‐quality auditors.Theoretical/Academic ImplicationsThis study advances our understanding of the varied agency effects arising from family ownership, cash–vote divergence, and the family identities of CEOs, as well as the impact of family ownership and control features on auditor choice. Our empirical evidence provides a unique insight, showing that higher‐quality auditors do not tend to be appointed in firms where family alignment with outside investors is relatively strong, as this lowers demand for such auditors. In addition, although family entrenchment may create greater outside investor demand for higher‐quality auditors, such demand is difficult to realize.Practitioner/Policy ImplicationsAuditors are an important external governance mechanism. This study offers insights for policymakers, family owners, auditors, and other capital market participants, with regard to the varied effects of different family ownership and control features on auditor choice.