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Family control and ownership monitoring in Stakeholder-oriented corporate governance

Hideaki Sakawa (Graduate School of Economics, Nagoya City University, Nagoya, Japan)
Naoki Watanabel (Graduate School of Economics, Nagoya City University, Nagoya, Japan)

Management Decision

ISSN: 0025-1747

Article publication date: 8 November 2018

Issue publication date: 5 July 2019




Principal–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.


This 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.


The 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.


Existing 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.



Sakawa, H. and Watanabel, N. (2019), "Family control and ownership monitoring in Stakeholder-oriented corporate governance", Management Decision, Vol. 57 No. 7, pp. 1712-1728.



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