Search results

This study aims to examine whether chief executive officer (CEO) pay-performance sensitivity to shareholder wealth is related to the use of non-financial performance measures in incentive contracts.

Using hand-collected performance measure data in a sample of S&P 500 firms across the period 1994–2010, this study investigates the sensitivity of CEO bonus and cash pay to shareholder wealth of firms that use non-financial performance (NFPM) measures of varying types and contractual weights in their bonus contracts along with financial measures (NFPM firms) in comparison to that of firms using financial measures only (FPM firms).

This study finds evidence that the pay-performance sensitivity is stronger in NFPM firms than in FPM firms. These results are driven by the use of CEO individual goals and operational efficiency. Furthermore, when using environmental, social and governance factors, the pay-performance sensitivity is stronger in terms of accounting performance only. This study also finds that using NFPM enhances pay-performance sensitivity more as their contractual weights increase and as financial risk increases.

These findings are important to stakeholders, and especially regulators in understanding incentive effects of alternative performance measures. This study also sheds light on what types of non-financial measures are better in helping firms align CEOs’ incentives to shareholders’ interests.

This study contributes to prior research on benefits of non-financial information within the context of executive compensation. This study presents original results about the effects of contractual weights of non-financial measures and financial risk on CEO pay-performance sensitivity. This study also presents new insights regarding how different types of non-financial measures affect CEO pay-performance sensitivity.

The aim of this paper is to examine the effect of structural and demographic board diversity as well as board tenure on family firms' environmental performance, by analyzing the differences between family and non-family businesses and within family firms.

Tobit regressions are applied to investigate the effect of independent directors, CEO non-duality, board gender diversity and board tenure on environmental performance. The study also controls for other board and firm characteristics, as well as for time, industry and country-fixed effects. In doing so, the authors rely on a sample of non-financial listed firms from France, Germany, Italy, Spain and Portugal over the period 2014–2021.

The authors find that women on the board positively influence environmental performance and this effect is significant only in family firms, although board tenure negatively moderates the relationship. Board independence significantly affects environmental performance only in non-family firms. A strong presence of family directors has a negative effect on family firms' environmental performance, especially when directors' turnover is low.

This paper examines the unexplored relationship between structural board diversity and environmental performance in family companies. This study provides empirical evidence on the association between gender diversity and family firms' environmental performance focusing for the first time on a European setting. Moreover, this study provides evidence of a different effect of board tenure in family and non-family businesses.

This paper aims to investigate the effect of the nature of ownership and board characteristics on the investment choices in joint ventures (JVs) from the dimensional point of view, controlling for the effect of JV type and other components of intellectual capital.

The authors study a sample of Italian, Spanish, German and French nonfinancial listed firms over the 2010–2018 period, controlling for the fixed effects of the company's sector of operation and the year. The authors also analyze the effect of family control and influence on JV investment size, taking into consideration certain board characteristics, the type of JV, human capital efficiency, structural capital efficiency and capital employed efficiency while also controlling for a firm's profitability and size. To test the hypotheses, GLS panel data was used.

The results indicate that the size of the investment in JVs is smaller for family firms than for nonfamily businesses. The presence of CEO duality has an opposing effect on the size of the investment in joint ventures as it has a lowering effect in family businesses while it exerts an amplifier influence in nonfamily businesses. Moreover, the type of joint venture has a significant effect for family firms: the choice of a link joint venture reduces the size of the investment. The authors find that human capital efficiency increases JV investment size for all firms.

This study is the first to analyze the effect of the main dimension of socioemotional wealth – family control and influence – on a firm's JV investment size. It controls for the effect of JV type – link or scale – and the interplay of the other IC components.

The purpose of this paper is to investigate the effect of family control on the association between related party transactions (RPTs) and different forms of accrual-based earnings management (AEM) and real earnings management (REM), analyzing the effect of board characteristics on the possible association.

This paper studies a sample of Italian non-financial listed firms over the 2014–2019 period, by GLS regression models, controlling for the fixed effects of the company's sector of operation and the year.

Results indicate a different association between RPTs and earnings management (EM) in family and non-family firms. They point out that family firms use RPTs in association with downward AEM and REM perpetrated by abnormal discretionary expenses as well as a substitute of REM via abnormal production costs. For non-family firms, findings indicate only a substitution effect between RPTs and AEM. Furthermore, CEO duality, board gender diversity and the presence of the family on the board positively moderate the association between RPTs and, respectively, REM implemented through sales manipulations, downward AEM and upward AEM.

This study suggests that the socioemotional wealth (SEW) differently affects the relationship between RPTs and EM, according to the form of the latter. It also points out family firms' heterogeneity in earnings manipulations, by providing evidence of the moderating role of board characteristics on the association between RPTs and the various forms of EM.

This study aims to explore the relationship between chief executive officer (CEO) power and stock price crash risk in India. Furthermore, it seeks to analyse how insider trades may moderate the impact of CEO power on stock price crash risk.

A study of 236 companies from the S&P BSE 500 Index (2014–2023) have been analysed through pooled ordinary least square (OLS) regression in the baseline analysis. To enhance the results' reliability, robustness checks include alternative methodologies, such as panel data regression with fixed-effects, binary logistic regression and Bayesian regression. Additional control variables and alternative crash risk measure have also been utilised. To address potential endogeneity, instrumental variable techniques such as two-stage least squares (IV-2SLS) and difference-in-difference (DiD) methodologies are utilised.

Stakeholder theory is supported by results revealing that CEO power proxies like CEO duality, status and directorship reduce one-year ahead stock price crash risk and vice versa. Insider trades are found to moderate the link between select dimensions of CEO power and stock price crash risk. These findings persist after addressing potential endogeneity concerns, and the results remain consistent across alternative methodologies and variable inclusions.

This study significantly advances research on stock price crash risk, especially in emerging economies like India. The implications of these findings are crucial for investors aiming to mitigate crash risk, for corporations seeking enhanced governance measures and for policymakers considering the economic and welfare consequences associated with this phenomenon.

The study aims to analyze for the Spanish context the influence of the involvement of several generations in the firm's management on family firm internationalization. The authors also respond to the call in the literature to consider the influence of SEW on family firm internationalizations by analyzing the moderating effect of the importance family managers attach to each of the socioemotional wealth (SEW) dimensions – enrichment, continuity and prominence on the relationship between multiple generations involved in management and family firm internationalization.

The information was obtained by means of a questionnaire sent to the CEOs of family businesses. The authors’ sample consists of 147 Spanish family firms.

The authors find that the involvement of multiple generations in management is positively related to the internationalization of family firms. Furthermore, the importance that family CEOs attribute to the enrichment dimension of SEW reduces the intensity of the effect of the involvement of several generations in management on family firm internationalization.

The authors’ results, for the Spanish context, complement previous studies (Meneses et al., 2014) showing that the entry of new generations into the family business opens a window of opportunity for the internationalization of the family business. Furthermore, their study shows that the diverse family objectives by CEOs can have different, even conflicting effects on the internationalization decision. These results suggest that the enrichment dimension, which focuses on the short-term family goals may restrain the internationalization of the family business. However, continuity and prominence dimensions, which are related with long term family objectives and jointly enable the fulfillment of nonfamily stakeholders’ objectives, do not influence the internationalization of the family firms analyzed.

Boards of directors often attempt to foster corporate entrepreneurship by replacing a firmʼs chief executive officer (CEO). Compelling theoretical arguments and anecdotal evidence suggest that when firm performance has suffered, a new CEO is best suited to lead the firmʼs creative endeavors. On the other hand, among firms that retain their existing CEO after a decline in performance, manipulating the CEOʼs compensation package is a common governance practice used by boards to encourage innovation. In these cases, some have argued that increasing the CEOʼs pay will encourage corporate entrepreneurship, because the CEO has been compensated for assuming additional risk. Counter to these propositions, this study develops theoretical arguments that a firmʼs existing CEO is better equipped to foster corporate entrepreneurship and that this probability increases when the CEOʼs cash compensation is decreased. Results from a sample of 100 single-product manufacturing firms suggest firms that retain their current CEO and decrease the CEOʼs cash compensation are most likely to engage in corporate entrepreneurship. Implications that this research has for corporate entrepreneurship, corporate governance, and firm performance are discussed.

This paper aims to examine the influence that family firms’ top management team (TMT) behavior and characteristics exert on their innovation opportunity realization.

Data were collected through a survey addressed to a representative sample of Italian firms. The analyzed sample consists of 237 firms, 120 of which are family firms. A series of ordinary least squares models were used to test the four hypotheses.

Family firms realize fewer innovation opportunities than non-family firms. This result is fully mediated by the knowledge exchange in the TMT as follows: in family firms, the TMT exchanges less knowledge than in non-family firms, which drives their lower realization of innovation opportunities. In family firms TMT, the increase in the non-family members positively influences the TMT knowledge exchange, but only when the time the Chief Executive Officer (CEO) spends in searching for innovation opportunities outside the firm is low. The more the CEO search increases, the more this positive influence decreases, up to the point it becomes negative.

The study contributes to the literature on innovation, knowledge management and organizational design in family firms. Nevertheless, data were collected at a single point in time and in a single country.

The study suggests family firms on how to foster the realization of innovation opportunities. A greater TMT knowledge exchange allows to realize more innovation opportunities and the TMT characteristics emerged as the drivers of this TMT knowledge exchange. As such, family firms should examine the interaction of their TMT composition in terms of non-family and family members with the effort that the CEO deploys to search for innovation opportunities outside the firm.

Empirical investigation of the link between family ownership, absorptive capacity and innovation performance by considering TMT behavior and characteristics.

This study investigates the relationship between board gender diversity (BGD) and the time to Initial Public Offering (IPO), which stands as an entrepreneurially risky choice, particularly challenging in family firms. We also investigate the moderating role of family ownership dispersion (FOD).

We draw on an integrated theoretical framework bringing together the upper echelons theory and the socio-emotional wealth (SEW) perspective and on hand-collected data on a sample of Italian family IPOs that occurred in the period 2000–2020. We employ ordinary least squares (OLS) regression and alternative model estimations to test our hypotheses.

BGD positively affects the time to IPO, thus, it increases the time required to go public. FOD negatively moderates this relationship. Our findings remain robust with different measures for BGD, FOD, and family business definition as well as with different econometric models.

The article develops literature on family firms and IPO and it enriches the academic debate about gender and IPOs in family firms. It adds to studies addressing the determinants of the time to IPO by incorporating gender diversity and the FOD into the discussion. Finally, it contributes to research on women and outcomes in family firms.