Influence Of Family Ownership Research Articles

Family firms and corporate social responsibility: exploring “concerns”

PurposeScholars are devoting increasing attention to understanding a specific type of strategic initiative in family firms: corporate social responsibility (CSR). Prior studies have focused on the strengths of family firms’ CSR performance. However, to more fully understand family firms and their engagement in CSR, a granular approach is needed that teases apart the strengths and concerns of CSR performance and examines the specific dimensions that comprise CSR performance. Thus, the purpose of this paper is to theorize about six negative (i.e. concern-oriented) dimensions of family firms’ CSR performance.Design/methodology/approachTo examine the interrelationship between a firm’s percentage of family ownership and its CSR concerns, a sample of 71 public firms from Fortune 500 companies was constructed. The sample includes 13 years of firm-level data spanning 1994-2006 and represents over 600 firm-year observations.FindingsAs predicted, a higher percentage of family owners’ equity is positively related to diversity-oriented CSR concerns and negatively related to employee relations and environmental CSR concerns. However, the percentage of equity owned by family members is not associated with community, product quality and safety, and corporate governance CSR concerns.Originality/valueThe paper addresses substantive omissions in existing research on the influence of family ownership on CSR performance.

The effect of uncertainty on FDI entry mode decisions: The influence of family ownership and involvement in the board of directors

This study aims to resolve the debate regarding whether family owners facilitate or restrain internationalization, by examining the role of family owners as firms cope with uncertainty. According to the transaction cost economics (TCE) perspective, which differentiates between internal (behavioral) uncertainty and external (environmental) uncertainty, firms tend to choose wholly-owned subsidiaries over joint ventures as internal uncertainty and external uncertainty decrease. We hypothesize that, due to family members’ concerns regarding the preservation of socioemotional wealth (SEW), firms with higher family ownership and involvement in the board are even more likely to choose wholly-owned subsidiaries over joint ventures as internal uncertainty and external uncertainty decrease. We use a sample of 1463 observed investments from 681 companies publicly listed on the Taiwan Stock Exchange to test our hypotheses. The empirical results show that family owners’ involvement in the board facilitates internationalization when facing low internal uncertainty; as internal uncertainty decreases, firms with higher family involvement in the board have a higher propensity to choose wholly-owned subsidiaries, the high-commitment FDI entry mode.

Does the Second Generation as Returnee Make Family Firms More Entrepreneurial?

So far, the influence of family ownership on corporate entrepreneurship in family firms is controversial. Some scholars believe that a high level of family ownership will enhance corporate entrepre...

Influence of family ownership on the industry-diversifying nature of a firm’s M&A strategy: Empirical evidence from Continental Europe

We investigate how family ownership influences the industry-diversifying nature of M&As by listed companies in Continental Europe and the corresponding shareholder value effects at deal announcement. For a large sample of 3485 M&As during 2005–2013, we observe that acquirers having a family as the largest shareholder are less inclined to take over an unrelated target firm than lone-founder and other types of non-family firms. However, as the size of the family ownership stake increases, family firms become more eager to follow an industry-diversifying M&A strategy. While industry-diversifying M&As are associated with lower abnormal returns for acquirer shareholders on average, we also observe that family ownership fully reverses this negative effect. We therefore conclude that those unrelated M&As, although still representing a conflict of interest with the family firm’s minority investors, do not destroy shareholder value on average.

Influence of family ownership on company performance

Purpose The purpose of this paper is to investigate the relationship between family ownership and the performance of Brazilian companies listed on BM&FBovespa. It also provides a comparison with the results of Shyu’s (2011) survey conducted in Taiwanese companies. Design/methodology/approach A sample of 187 Brazilian companies were surveyed, of which 120 were classified as family owned, considering the family participation in the capital and in the board of directors. As in Shyu’s (2011) study, three variables of performance, two of accounting and one of market, and seven variables of control were considered. Simultaneous equations were used to analyze the relationship between family participation and corporate performance, the test of mean was used to compare performance and other variables between family- and non-family-owned companies, and a graphical analysis was used to verify the extent to which family involvement contributes to better performance. Findings The results show that family-owned companies have lower performance compared with non-family-owned companies. They indicate a positive relationship between family participation (ownership) and performance of the company. They also reveal that the performance of family-owned companies is maximized when family involvement reaches 60 and 70 percent. Originality/value The survey conducted on Brazilian companies shows results that are partially consistent with those observed by Shyu (2011) in Taiwanese companies. Similarities were found in the relationship between family involvement and the performance of the company. However, the results differ with regard to the performance of family- and non-family-owned companies and the optimal level of family participation that can maximize performance.

The influence of family ownership and involvement on Chinese family firm performance: a systematic literature review

This systematic literature review aims to examine the state of knowledge regarding Chinese family firm performance and how the Chinese context influences the family ownership and involvement and performance relationship. Based on a sample 31 empirical studies derived from a systematic review of the available literature, we found that current research into the performance of Chinese family enterprises remains limited and offers little knowledge regarding how the cultural context of China per se affects family firms ownership and governance structures. We highlight important areas for future research including the use of institutional perspectives to provide the field a more holistic understanding of the features that distinguish performance of Chinese family enterprises from other family enterprises from other parts of the world.

The Influence of Family Ownership on Long-Lived Asset Write-Offs

Building on agency theory, this article investigates whether family firms’ accounting behavior regarding long-lived asset write-offs differs from that of nonfamily firms. We provide evidence that nonfamily firms use write-offs for earnings management purposes, while family firms report write-offs coherent with the firm performance. Family firms experience dwindling sales and lower profitability in the years following the write-offs, consistently with an effective decline in their assets value. The findings are consistent with reduced owner-manager agency conflicts in family firms. We find no indication of family entrenchment, which is consistent with family owners being concerned with the reputational damage associated with a loss of a firm’s asset value.

Influence of Family Ownership and Management on Firm Performance: Evidence from Public Firms in Turkey

Cet article examine l’influence en Turquie de la participation familiale sur la performance comptable et de marche de l’entreprise. Les resultats montrent que les niveaux moderes de la propriete familiale et la gestion active de la famille sont associes positivement a la rentabilite comptable, tandis que la propriete familiale et un president du conseil d’administration issu de la famille ont une influence negative sur la valeur de marche. Ces resultats contradictoires revelent que l’absence d’institutions juridiques et reglementaires developpees et d’un mecanisme de controle externe efficace dans les pays emergents constitue un obstacle a la traduction de la rentabilite comptable elevee en valeur de marche elevee. En outre, cette etude demontre que l’utilisation des mecanismes de renforcement du controle, qui est associee negativement a la rentabilite comptable, diminue la performance de marche en presence d’un management familial de l’entreprise.

Pengaruh Struktur Kepemilikan Keluarga dan Pemerintah Terhadap Kerugian Kredit Bank

. Credit losses, has been repeatedly identified as the principal cause of the failure of the bank. However, the extant literatures that examine the determinants of bank credit losses are still very rare. One is the structure of family ownership. In fact, 70% of banks in Indonesia are very concentrated on family ownership thus this condition may cause the entrenchment effect of family ownership on minority shareholders. Hence, the main purpose of this study is to investigate the influence of family ownership and government ownership on credit losses. Other determinant that being investigated is the possibility of non-linear effect of banks size on credit losses. This study used the generalizedmethod-of-moments (GMM) estimator developed for dynamic models of panel data. By using the Indonesian banking data from 2004 to 2014, the results shows that the bank with family ownership has a greater credit losses than other banks (non-family). However, this study fails to find the influence of government ownership on credit losses. While, the relationship between bank size and credit losses is linear and this study fails the non-linear relationship between the bank size and credit losses. The implications of this research are Financial Services Authority should enact and enforce the regulation that mitigate the expropriation of family ownership and consequently, the credit losses of Indonesian bank will be relatively reduced.

Servitisation and technological complexity in family and non-family firms: European evidence

Servitisation is an emerging topic in practice and in the academy. In this paper, we address the influence of family ownership on servitisation strategy, using data collected through the European manufacturing survey, an international large–scale survey on trends in manufacturing. We approach our hypotheses through the lens of the Socio–Emotional Wealth (SEW), considering the characteristics of family firms and the rationales for servitisation. This paper provides evidence of the important role of technological factors in understanding the particular behaviour of family firms and provides empirical support for the rationales behind the SEW approach.

Family ownership and R&D investment: The role of growth opportunities and business group membership

This study examines whether the influence of family ownership on R&D investment varies depending on growth opportunities and business group membership. Using data on Korean firms over ten years (1998-2007), the study shows that family ownership is negatively related to R&D investment, but the relationship becomes positive when growth opportunities are present. The moderating effect, however, differs between independent family firms and family business groups. The positive influence that growth opportunities have on promoting R&D investment is diminished for affiliates of family business groups. These findings imply that family owners invest more in R&D when their family control goals are threatened by the loss of growth potential. The empirical results of this study and its behavioral decision-making model help to bridge the gap between the predictions of the family control perspective and agency theory in explaining R&D investment by family firms in an emerging economy.

The Influence of Family Ownership on Corporate Social Responsibility: An International Analysis of Publicly Listed Companies

Manuscript TypeEmpiricalResearch Question/IssueWe investigate the impact of family equity holdings on three indicators of corporate social responsibility: environmental, social, and governance (ESG) rankings. We further evaluate how firm governance mediates the effect of family ownership on environmental and social improvements and how national governance systems influence the response of family holdings to ESG.Research Findings/InsightsBased on a sample of 23,902 firm‐year observations drawn from 2002 to 2012 covering 46 countries and 3,893 firms, our findings show that both closely held equity and family ownership are negatively associated with ESG performance. When we control for governance, closely held equity is no longer associated with environmental and social rankings, but family ownership retains a significant negative association. These results are strong and consistent across liberal market economies (LME), whereas coordinated market economies (CME) exhibit generally weaker results and considerable diversity. Japan stands out as different from the other countries examined in depth.Theoretical/Academic ImplicationsOur results are consistent with agency relationships driving decisions concerning ESG commitment in LMEs. They also emphasize the role of institutional differences given the weak and variable association between ownership and ESG in CMEs. We show that families may be able to influence decisions, possibly through participation in management, despite normally effective governance constraints. As the impact of ownership and governance varies across economies and ownership type, this implies that both agency and governance should be evaluated in the context of the economic environment.Practitioner/Policy ImplicationsOur results offer insights to regulators and policy makers who intend to improve ESG performance. The results suggest that encouraging diversified ownership is particularly important in LMEs, that improvements in governance may benefit social and environmental performance where equity is closely held by institutions, but that governance may be less effective in the presence of family ownership.

Founding Family Ownership and Firm Performance in Consumer Goods Industry: Evidence from Indonesia

This research investigates the significant influence of family ownership on the firm performance in order to provide information to decision maker and other interested parties. The analysis includes comparison between family and non-family firm performance in Indonesia. The samples are taken from 31 consumer goods companies, listed in Indonesian Stock Exchange, ranging from 2005 to 2009. The result describes that non-family firms perform better than family firms and no significant influence between family ownership and firm’s profitability. On the other hand, family ownership has negative contribution to firm market valuation. The study suggests that family firms have less financial performance than that of non-family. Family member within the top position and have major control rights contribute negative influence to firm performance. The evidence raises concerns about possible profit manipulation and weak governance law in Indonesia, and as a result there is an expropriation of wealth to the majority and family related shareholders.

Family Firms and Top Management Compensation Incentives

We examine the influence of founding family ownership, family involvement in management, and promotion environments in family firms on compensation incentives. When family members participate in management, family firms provide lower pay-for-performance sensitivity (PPS), weaker tournament incentives to non-CEO executives, and weaker risk-taking incentives (vega) to non-family executives. Tournament and performance-based incentives exert little influence on performance in these firms. The influence of family ownership on PPS and vega is significantly stronger than the influence of non-family blockholder ownership. Altogether, the results suggest that family ownership, family management, and familial attachment combine to create both superior monitoring and private benefits.

The Influence of Family Ownership on the Quality of Accounting Information

This article explores the quality of accounting information in listed family firms. The authors exploit the features of the Italian equity market characterized by high ownership concentration across all types of firms to disentangle the effects of family ownership from other major block holders on the quality of accounting information. The findings document that family firms convey financial information of higher quality compared to their nonfamily peers. Furthermore, the authors provide evidence that the determinants of accounting quality differ across family and nonfamily firms.

The influence of family ownership on SME performance: evidence from public firms in Taiwan

The relationship between family ownership and firm performance has gained increased attention in the business strategy and financial economics literature. Most existing studies use large companies as the research sample; studies that explicitly investigate the influence of family ownership on the performance of small- and medium-sized enterprises (SMEs) remain sparse. This study raises this issue explicitly by investigating the influence of founding-family ownership on the return on assets and Tobin’s q of 341 public SMEs in Taiwan, during the period of 2002–2006. It emerges from the data that family ownership is prevalent and substantial in Taiwan, representing half of the public SMEs and accounting for more than 11 percent of their outstanding equity. It was found that the influence of family ownership on SME performance is positive and significant. Overall, the results suggest that family ownership is an effective organizational structure for SMEs in Taiwan.