Family Ownership Research Articles

The difference of investment efficiency between family and non-family firms: An international scope

Due to the inconsistencies in their economic priorities, family firms and non-family firms are likely to operate and invest differently. In this study, we use a sample of international public companies to investigate whether there is a difference between family firms and non-family firms regarding their investment efficiency. We find that compared to non-family firms, family firms invest inefficiently. We also investigate the moderating role of country-level regulatory quality on the level of investment efficiency. We find that the association between family firms and investment inefficiency can be ameliorated when regulatory environments are taken into consideration. In addition, we document the role family ownership and gender diversity play in the main effect between family firm involvement and investment inefficiency.

Family Ownership Influence on Cost Elasticity

This study explores the relation between family ownership and cost elasticity. Using a sample of 1746 European firms, we first find that family ownership, a prevalent ownership type with unique characteristics, is associated with greater cost elasticity. Further, we use four empirical settings to increase our confidence that a higher cost elasticity is attributable to family ownership. We also document that family firms achieve greater operating cost elasticity primarily through modifying SG&A costs in response to changing sales, but not by hiring or firing employees. These findings extend prior studies on ownership effects on cost structures, suggesting that family ownership matters in understanding firms’ cost elasticity choices.

Transgenerational control intention and employment practices of family firms in China

PurposeThis study aims to examine the employment practices of family firms in emerging markets. Drawing from the social exchange theory, the authors propose that transgenerational control intention enhances the motivation for family owners to engage in favorable employment practices as inducement for future contribution of employees.Design/methodology/approachMultilevel regression models were applied to test the hypotheses with a sample of 3033 Chinese private family firms.FindingsThe results show that the employment practices of family firms are positively associated with transgenerational control intention, and the effect of transgenerational control intention is contingent on regional social trust.Originality/valueThis study highlights the role of transgenerational control intention of family owners in motivating favorable employment in family firms. The study adds nuance to the variances in employment behaviors of family firms as well as the family owner-employee exchange relationship in emerging markets.

The fall of the oligarchic ownership of the Kyosogi family in the second decade of the 14-th century. Causes and analysis

The article is devoted to the period that ended the age of dynastic confrontation in the Hungarian kingdom and became decisive for the establishment of the power of the new Anjou dynasty, which in the future had a significant impact on the political life of Eastern Europe and Italy. A dangerous precedent - the division of power and territories of the kingdom within the ruling family during the reign of King Bela IV led to a decline in the prestige of the royal power and brought about a tectonic split in the ruling states of the state. The hypothetical renaissance of the Бrpбd monarch's prestige and royal power, which took place during the reign of King Andrбs III, ended with his untimely death, plunging Hungary into years of dynastic strife. Research methods. First of all, comparative-historical and structural-systemic methods of analysis, methods of induction and deduction, problem-chronological method of presenting the material were used. Scientific novelty. The outlined problems have not been considered in historiography before. Conclusions. In the autumn of 1300, probably none of those who met the small honor of the minor Neapolitan prince Charles Robert, who had previously been excluded from the right to inherit his Italian possessions, had no doubt that he would repeat the fate of his predecessors and become an obedient tool in the hands powerful subjects, such as Shubych, Kyosogi, Chak, etc. However, during the ten years of his reign, Charles I Robert managed to consolidate in his hands the power necessary to destroy powerful oligarchic possessions, among which the province of the Kyosogi family was one of the most powerful. Therefore, the fall of the power of this family became one of the milestones of the destruction of oligarchic possessions by Karl I Robert, which was a prelude to the onset of the period, which in Hungarian historiography was called the "Golden Age".

FAMILY OWNERSHIP MATTERS FOR INVESTORS IN INDONESIA'S MINING COMPANIES

This study aims to determine the effect of family ownership, financial performance, return on assets, return on equity, liquidity, and capital structure on market value. Secondary data was obtained based on annual reports and financial statements in mining companies listed on the IDX in 2016-2020 through Indonesia Stock Exchange (IDX). Data were obtained from the Bloomberg database. The method used to collect samples is purposive and consists of 35 mining companies in Indonesia. The panel data method was considered appropriate in this study, and multiple regression was used to examine the data. The results show that total assets and return on assets positively affect market value. The ratio of return on equity and liquidity in financial performance and capital structure has no significant effect on market value. The existence of family ownership is favourable for a firm’s market value. The sample in this study was limited to the manufacturing sector. This industry was chosen because its market value is quite volatile and family ownership is quite large. On average there are 40% of the total observations are family-owned companies. The interesting findings in this study are that family ownership does matter in gaining the investors’ attention.

HUMAN RIGHTS DISCLOSURE ON PANDEMIC REPORTING PERIOD IN INDONESIA

The study aims to explain the effect of the pandemic reporting period, non-executive board, audit committee, and family ownership on increasing human rights disclosure. The pandemic of COVID-19 has created an economic pandemonium globally, including in Indonesia. Indonesia's independent agency of the FSA issued a public notice in March 2020, extending the reporting period to May 2020, extending two months. This extension has created an opportunity for companies to announce their human rights practice disclosure facing the oncoming turbulent times. UNGP-BHR and the Indonesian State Law No. 39 of 1999 about Human Rights are used as the disclosure index checklist. Our study uses 345 non-financial sectors listed on the Indonesia Stock Exchange (IDX) with an observation period of 2017 - 2019. The data analysis technique is panel regression. The result shows that the pandemic reporting period, the non-executive board, and the audit committee have positively affected human rights disclosure. The 2019 annual report recorded that human rights disclosure was higher in the pandemic reporting period than in the 2017 and 2018 annual reports. This research implies that companies consider the oncoming turbulent times caused by the pandemic in disclosing last year's human rights disclosure. The non-executive board and the audit committee have a spirit of UNGPs that encourages companies to implement human rights in their operations.

The Effect of Working Capital Management and Family Ownership on Profitability and Liquidity (Study of Family Companies Listed on the Indonesia Stock Exchange in 2018-2022)

This article aims to examine the impact of working capital management and family ownership on the profitability and liquidity of family-owned companies listed on the Indonesia Stock Exchange from 2018 to 2022. The research utilizes a quantitative approach by analyzing financial data about working capital, family ownership, profitability, and company liquidity. The data used in the study is obtained from publicly available financial reports of family-owned companies listed on the Indonesia Stock Exchange. Data collection is conducted through a thorough review of documentation. The research sample consists of active family-owned companies that possess complete data for analysis. Multiple linear regression is employed to assess the relationship between working capital management, family ownership, profitability, and company liquidity. The findings reveal that both working capital management and family ownership significantly influence the profitability and liquidity of family firms. These findings offer valuable insights for family firm management to enhance their financial performance. Effective management of working capital can contribute to improved profitability and liquidity, while family ownership also plays a crucial role in determining the financial performance of family-owned companies. Furthermore, in addition to its practical implications, this research contributes theoretically to the existing literature on working capital management and family ownership, specifically in the context of family-owned companies in Indonesia.

Evaluation of ownership structure and audit-quality in the wake of the Covid-19 crisis: empirical evidence from Jordan

PurposeThis study aims to collect new empirical evidence to determine how different forms of ownership structure responded to the recent COVID-19 crisis. In light of this tragedy, it explores the relationship between ownership structure forms (i.e. block-holders, foreign, institutional and family ownerships) and audit quality (proxied by audit fees).Design/methodology/approachIn total, 3,200 firm-year observations for Jordanian enterprises covering the years 2005 through 2020 are used in an ordinary least squares regression with firm-clustered standard error to assess the hypotheses.FindingsThe regression results showed that COVID-19 strengthens the association between each type of ownership (i.e. block-holders, foreign, institutional ownership forms) and audit quality. This result reflects the need for high-quality audit services during the pandemic by such owners to improve their business decisions and limit agency-conflict issues. However, the analysis failed to find any effect of COVID-19 when it comes to family ownership. Family-controlled firms may react faster in crisis situations, and correspondingly, they do not bear high audit costs. The extended analysis covering the years 2005–2022 came to the same results.Practical implicationsThe results aid authorities in their control and management of the auditing business. The findings have important consequences for policymakers, lawmakers, regulators and the audit profession as they assess the growing issues in an uncertain economic environment. Evidence is provided that may be used to reassure investors and aid authorities as they devise appropriate remedies to the pandemic-triggered economic crisis. The findings may aid in the improvement of legislation that governs Jordan’s auditing industry. Furthermore, the results can be generalized to other Middle Eastern countries.Originality/valueTo the best of the authors’ knowledge, this is the first study to empirically evaluate how different types of ownership affect audit quality in response to a dramatic shift in auditors’ working conditions brought on by the global health calamity. In emerging economies like Jordan, this type of analysis allows for preliminary assumptions to be established about ownership status during the COVID-19 outbreak. It adds to the body of auditing knowledge by shedding light on how various kinds of ownership affect responses to adverse events. This assessment is intended to serve as the definitive testimony in the field of accounting regarding the effects of the coronavirus across various corporations’ portfolios.

Family ownership and audit fees in emerging countries: the moderating role of political connections

PurposeThis study aims to examine the effect of family ownership on audit fees and whether political connections moderate the causal relationship. Indonesia, as emerging countries, arguably offers appropriate research setting for this research because most Indonesian firms are family owned and exhibit weak investor protection. The authors predict that family ownership positively affects audit fees, and political connections strengthen this influence.Design/methodology/approachThis study uses 98 listed manufacturing firms on Indonesia Stock Exchange (IDX) in 2018–2020, resulting in 279 firm-year observations. Panel data regression used to test the hypothesis. Family ownership is divided into direct and indirect ownership while audit fees are measured by the natural logarithm of audit fees paid by the firms.FindingsThe results show that the greater total and direct family ownerships imply lower audit fees, while indirect family ownership does not affect audit fees. The finding is contrary to the alleged hypothesis. Further, political connections only strengthen direct family ownership's negative impact on audit fees.Originality/valueThis study's findings support the alignment effect hypothesis arguing that controlling shareholders, in this case, families, align their interests with non-controlling shareholders. These findings provide a different perspective from various empirical studies conducted in Asian countries where the majority of companies are also controlled.

The Effect of Political Connections and Family Ownership on Operating Cash Flows Management: Empirical Evidence from Egypt

Purpose: This paper aims to investigate the effect of political connections and family ownership Each separately and the interactive effect between them on cash flows management. Design/Methodology/Approach: To analyze the research hypotheses, the author used a panel data model by ordinary least squares' Depending on historical data from 72 active non-financial firms listed on the Egypt Stock Exchange during the period of 2012-2019. The final data set comprises a total 576 firm-year observations from twelve major non-financial industry classifications. Findings: The current study found that there is a Positive impact of family ownership on cash flow management, and there is a positive relationship between political connections and cash flows management while there is a negative relationship between family firms with political connections and cash flows management. Research limitations/Implications: This research is limited to dealing with direct family ownership structures and does not deal with indirect family ownership. Likewise, this research does not deal with the political connections in companies that arise through direct government ownership. Also, this research was limited to using linear regression analysis that did not address nonlinear regression or the structural equation model to examine the effect of family ownership and political connections on cash flows management. Practical implications: Practitioners such as investors and lenders dealing with companies in the Egyptian capital market, which is considered one of the emerging markets with low protection for small investors, benefit from the results of this study due to the impact of family ownership and political connections when making their investment decisions. At the same time, the study helps provide important information about the business environment and conditions. Investing in developing countries like Egypt. Originality/Value: The current study contributes to the literature by showing that different characteristics of companies such as family ownership and political connections can produce different consistent results between an emerging and developed economy, especially in the area of cash flows management. As this is the first study to analyze these relationships in the financial market in Egypt, where the study demonstrates the important role of the impact of political connections and family ownership separately, in addition to the joint effect of political connections and family ownership on cash flows management through empirical evidence.

Family ownership and speed of adjustment towards targeted capital structures: A study of ASEAN firms

AbstractUtilising a sample of ASEAN firms, we examine the effects of family ownership on firms' speed of adjustment to targeted capital structure. We find that family firms adjust their capital structure more slowly than non‐family firms. This is due to the higher costs of adjustment associated with high information asymmetry and agency conflicts between family owners and external investors. The effect of family ownership on capital structure adjustment speed is more pronounced when family firms have a higher level of family board involvement and higher ownership concentration. There is also an asymmetric effect of family ownership on capital structure adjustment speed at different levels of debt, by the distance from the targeted capital structure, and between overleveraged and underleveraged firms. Overall, evidence in our study suggests that family ownership is a key determinant on how quickly ASEAN firms may adjust their capital structure towards targeted levels.

PENGHINDARAN PAJAK, INCOME SMOOTHING DAN NILAI PERUSAHAAN PADA PERUSAHAAN MANUFAKTUR DI INDONESIA

Tax avoidance and income smoothing are important issues that impact the company's operations. The complexity between these two phenomena affects firm value, which is often influenced by family ownership, which influences how manufacturing companies avoid tax avoidance and income smoothing. This study aims to examine the effect of tax avoidance and income smoothing on firm value, with family ownership as a moderating variable. Hypothesis testing was carried out using a multiple regression model with panel data for manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2012-2021 period. The results show that tax avoidance has a negative effect on firm value. Tax avoidance is high risk and can reduce company value. This study also found that income smoothing has a positive effect on firm value. Companies tend to do income smoothing to meet market expectations and get benefits in the form of lower debt costs. In addition, this study shows that family ownership strengthens the negative effect of tax avoidance on firm value. However, this study did not find any moderating effect of family ownership on the effect of income smoothing on firm value.
 Keywords: Firm Value, Tax, Income Smoothing

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?

Kajian Kepemilikan Keluarga pada Perusahaan Initial Public Offering Tahun 2022 di Bursa Efek Indonesia

This researcher aims to examine family ownership in companies that have an Initial Public Offering in 2022 on the Indonesian Stock Exchange. This study includes the characteristics of family ownership, the portion of family ownership either directly or indirectly, and the ultimate beneficial owner. This type of research is qualitative. This study observes companies that have Initial Public Offerings on the Indonesia Stock Exchange in 2022, totaling 15 companies. The data used in this study is secondary data, namely in the form of company prospectus reports published on the Indonesia Stock Exchange. The data analysis technique used is descriptive method. The results of this study found that 9 out of 15 companies that had an Initial Public Offering on the Indonesia Stock Exchange in 2022 were owned by families, either directly or indirectly. Ownership by the family, namely having the characteristics of a married couple, and siblings. The portion of family ownership dominates in the 9 companies observed, ownership is owned directly or indirectly through other companies formed. Likewise, the ultimate beneficial owner of the company is dominated by family ownership.

Family firm heterogeneity and patenting. Revising the role of size and age

This study offers a comprehensive framework for evaluating the moderating effects of size and age on the relationship between family ownership and innovation. The research hypotheses are tested on a large sample of Italian firms observed over the 2010–2017 period using a zero-inflated nonlinear count model. To refine the understanding of firm heterogeneity, we employ a three-way interaction approach. Results show that the patenting gap between FFs and non-FFs is sensitive to size and age. Compared to non-FFs, FFs underperform when they are small and young, or large and mature, with no substantial differences seen in other types of firms. By referring to the Socioemotional Wealth theory, we find that the founder effect, which differs over a firm’s life, is behind a good deal of these findings.

Family Owner–Nonfamily CEO Relational Practices Shaping CEO Succession: Handling Equivocality and Relational Balancing

This study focuses on family owner–nonfamily CEO relational practices and what these relational practices constrain and potentiate in family firm CEO succession. Our main contribution is developing a constructionist relational practice perspective and approach as an alternative to the entitative view that dominates the family business literature. We illustrate the relational practice perspective through our dialogically structured inquiries with family owners and nonfamily CEOs. We co-develop practical wisdom on how family owner–nonfamily CEO relational practices can construct stuckness in organizing or, conversely, open up new possibilities to go on depending on (i) the way the family owner and nonfamily CEO “handle” equivocality and tension they continuously (re)produce through their relational practices and (ii) the way they enact “relational balancing” to equilibrate their relation in the making in terms of value/self-worth maintenance by involving other actors, such as board members, management team members, or a coach.

Accruals, real earnings management, and CEO demographic attributes in emerging markets: Does concentration of family ownership count?

Accruals, real earnings management, and CEO demographic attributes in emerging markets: Does concentration of family ownership count?

Effects of incentive policies on the purchase intention of electric vehicles in China: Psychosocial value and family ownership

The effect of various policies on electric vehicle (EV) adoption has garnered increasing interest. However, most existing studies primarily focus on the direct effects, neglecting an in-depth exploration of the underlying mechanisms and their magnitudes. Drawing upon the perspective of social psychology regarding material possessions, this study examines the mediating role of psychosocial value, an individual’s mental mechanism, between three types of incentive policies (financial incentives, information provision, and convenience policies) and consumers’ intentions to purchase EVs. Additionally, we analyse the moderating effect of family EV ownership on the relationship between incentive policies and psychosocial value. Based on a survey of 402 respondents in China, our findings indicate that all three types of incentive policies positively influence consumers’ intention to purchase EVs. Moreover, psychosocial value mediates the relationship between incentive policies and purchase intention. Among the three types of incentives, the financial incentive policy holds the least importance in enhancing psychosocial value and purchase intention, while the convenience policy is deemed the most influential. Furthermore, the relationship between incentive policies and psychosocial value is stronger for families without EV ownership. Finally, we provide implications and suggestions for future research.

The impact of corporate ownership structure on corporate risk disclosure: evidence from an emerging economy

PurposeThe aim of this study is to measure the risk disclosure level and to determine the relationship between ownership structure dimensions (institutional ownership, foreign ownership and family ownership) and corporate risk disclosure in Jordan.Design/methodology/approachThis study used a sample of 94 Jordanian listed firms from the Amman Stock Exchange for the period from 2014 to 2017. This study measured risk disclosure using the number of risk-related sentences in the annual report, while random effects regression was used for hypotheses testing.FindingsThe results revealed that family ownership has a negative effect on risk disclosure practices, but institutional ownership, foreign ownership, firm size and leverage have no significant effect on the risk disclosure level.Practical implicationsThe finding of this study is more likely be useful for many concerned parties, researchers, authorities, investors and financial analysts alike in understanding the current practices of the risk disclosure in Jordan, thus helping them in reconsidering and reviewing the accounting standards and improving the credibility and transparency of the financial reports in the Jordanian capital market.Originality/valueThis study offers novel evidence detailing the impact of ownership structure toward corporate risk disclosure, its implementation in emerging markets following the minimal amount of scholarly efforts on the topic. To the best of the authors’ knowledge, this is the first examination of the impact of ownership structure on corporate risk disclosure. Thus, this study has important implications for the decisions of executives, policymakers, shareholders and lenders, as it enables them to better understand the linkage between ownership structure on corporate risk disclosure.

HRM formality: the role of contextual factors in shaping HRM formality among Pakistan SMEs

PurposeThis paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies.Design/methodology/approachThis briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context.FindingsA study of 300 owners of SMEs in Pakistan found that firm age, association with a larger parent entity, existence of a strategic business plan and the presence of a human resource information system (HRIS) are positively related with higher HRM formality. But firm size, family ownership and exporting characteristics had no association with formality.Originality/valueThe briefing saves busy executives, strategists and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.