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Book part
Publication date: 11 May 2007

Andrew Tylecote and Francesca Visintin

This paper is ambitious. Its central purpose is to examine how a number of developed economies, plus the largest developing economy, vary in terms of corporate governance…

Abstract

This paper is ambitious. Its central purpose is to examine how a number of developed economies, plus the largest developing economy, vary in terms of corporate governance: USA, Japan, Germany, UK, France, Italy, South Korea, Taiwan, Sweden, Switzerland and mainland China. We understand corporate governance in a very broad sense, descriptive not prescriptive: as who controls and influences firms, and how. We are thus dealing very much with varieties of capitalism. In a sense, we shall be seeking to characterise national systems of corporate governance, but we must stress that our concern is always with the situation of the individual firm. We shall find it convenient most of the time to give one label to a country's whole economy, but this will always be an approximation, which conceals variations among that country's firms. At other points, we shall distinguish types of firm and indicate the rough proportions of each type in a particular economy.

Details

Capitalisms Compared
Type: Book
ISBN: 978-1-84950-414-0

Book part
Publication date: 4 October 2018

Lucrezia Songini, Chiara Morelli and Paola Vola

Notwithstanding the relevance of managerial control systems (MCS) in any organization, as well the distinctive role they can play in family business, due to its specific…

Abstract

Notwithstanding the relevance of managerial control systems (MCS) in any organization, as well the distinctive role they can play in family business, due to its specific features, the literature rarely dealt with the role and characteristics of MCS in family business. Taking into account previous contributions from different disciplines (organization, management accounting, and family business), the current work aims to better understand the state of the art about research in the field of MCS in family business in order to identify main research gaps and propose future research directions.

Forty-five articles have been analyzed, which were issued in 29 sources. Research findings show that the literature on MCS in family business is limited and not very conclusive. Some authors focused on the type of controls, other authors outlined the role of MCS in managerialization and the relation with professionalization. A few studies focused on some specific mechanisms, especially strategic planning and compensation. Some contributes dealt with MCS’ determinants and impacts. Differences between family and non-family firms were proposed. However, a clear and organized picture of the features of MCS in family firms, their determinants, and impacts has not yet been developed. Particularly, the impact of the distinctive features of family business on MCS represents an underdeveloped research field along with how MCS can be differently developed and used in different kinds of family firms. In the light of findings of the literature review, we propose a reference research framework on MCS in family business.

Details

Performance Measurement and Management Control: The Relevance of Performance Measurement and Management Control Research
Type: Book
ISBN: 978-1-78756-469-5

Keywords

Article
Publication date: 4 April 2022

Daniel Magalhaes Mucci, Ann Jorissen and Fábio Frezatti

The paper investigates whether a family firm's control context is directly associated with a manager's stewardship attitude or whether this relationship is mediated by the…

Abstract

Purpose

The paper investigates whether a family firm's control context is directly associated with a manager's stewardship attitude or whether this relationship is mediated by the manager's perception with respect to the fairness of the control processes.

Design/methodology/approach

The authors have sent a survey to family businesses in Brazil. The authors tested the hypotheses with the data collected from 141 responding family and nonfamily managers with the use of structural equation modeling (SEM) analyses (SmartPLS).

Findings

The authors find that more participative and more formal controls are associated with higher procedural justice perceptions. Zooming in on the types of control, namely forward-looking action controls, like target setting (TS), and backward-looking results controls, like performance measurement (PM), the authors observe that TS is significantly positively associated with stewardship identification through a manager's procedural justice perceptions for both control characteristics (partial mediation for participative TS and full mediation for formal TS). PM on the other hand is only significantly directly related to a stewardship identification if it is of a participative character. In addition, the authors find a significant moderating effect of family affiliation, increasing the strength of the association between PM procedural justice and stewardship identification for nonfamily managers.

Originality/value

Prior literature focused on discussing stewardship attitudes and behaviors in family firms, but few provided empirical evidence that a stewardship attitude in a family firm is associated with contextual factors, like the design of controls in family firms in combination with a manager's individual perception of family firm's process factors.

Details

Journal of Family Business Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2043-6238

Keywords

Article
Publication date: 18 October 2021

Chun Su, Xing Liu and Huan Shao

This paper aims to investigate the influence of over-allocation and under-allocation of family board seats on the corporate investment efficiency.

Abstract

Purpose

This paper aims to investigate the influence of over-allocation and under-allocation of family board seats on the corporate investment efficiency.

Design/methodology/approach

Based on the perspective of altruistic behavior, this paper theoretically analyzes the relationship between the preference of family board seats allocation and corporate investment efficiency, and designs the research. On this basis, we use STATA14.0 as an analysis tool to empirically test the relationship between the preference of family family board seats allocation and corporate investment efficiency, and consider the impact of different governance scenarios.

Findings

This study finds that firms with a higher over-allocation degree of family board seats invest more efficiently, evidenced by significantly suppressed over-investment rather than mitigated under-investment. However, we do not find evidence that the higher degree of under-allocation of family board seats contribute to lower corporate investment efficiency. Additionally, this study finds that the positive relationship between the over-allocation degree of family board seats and corporate investment efficiency is more pronounced for firms with higher separation of cash flow rights and control rights, and weaker regional law system environment. Our mechanism discussion shows that the higher over-allocation level of family board seats contributes to the mitigation of agency costs for family firms by reducing the tendency for non-family boards to vote “against board proposals” and the appropriation behavior of the controlling family, and eventually improving corporate investment efficiency.

Originality/value

This paper examines the relationship between the preference of family board seats allocation and corporate investment efficiency from the perspective of altruistic behavior. Unlike previous studies, this paper distinguishes the governance effects arising from over-allocation and under-allocation of family board seats. Additionally, different governance scenarios are incorporated into the decision-making mechanism of the board of family firms, and the influences of the divergence of cash-flow and control rights and a weaker regional law system on the governance effect of the preference of family board seat allocation are analyzed.

Details

Nankai Business Review International, vol. 12 no. 4
Type: Research Article
ISSN: 2040-8749

Keywords

Article
Publication date: 22 July 2021

Erhan Kilincarslan

This study aims to investigate the impact of board independence on the cash dividend payments of family firms listed on the Borsa Istanbul (BIST) in balancing controlling

Abstract

Purpose

This study aims to investigate the impact of board independence on the cash dividend payments of family firms listed on the Borsa Istanbul (BIST) in balancing controlling families’ power to mitigate agency problems between family and minority shareholders in the post-2012 period. The authors focus on this period because Turkish authorities implemented mandatory regulations on the employment of independent directors on boards from fiscal year 2012.

Design/methodology/approach

The research model uses a panel dataset of 153 BIST-listed family firms over the period 2012–2017, employs alternative dependent variables and regression techniques and is applied to various sub-groups to improve robustness.

Findings

The empirical results show a strong positive effect of board independence on dividend decisions. The authors further detect that family directorship exhibits a negative effect, whereas both board size and audit committees have positive influences but chief executive officer (CEO)/duality has had no significant impact on the dividend policies of Turkish family firms since the new compulsory legal requirements in the Turkish market.

Research limitations/implications

The findings suggest that independent directorship and dividend policy are complementary governance mechanisms to reduce agency conflicts between families and minority shareholders in Turkey, which is a civil law-based emerging country characterized by high family ownership concentration.

Practical implications

The authors present evidence that Turkish family firms’ corporate boards have evolved, to some extent, from being managerial rubber stamps to more independent boards that raise opposing voices in family decision-making. However, independent directors’ preference for dividend-induced capital market monitoring implies that their direct monitoring is less effective than it is supposed to be. This suggests a need to revise the Turkish Corporate Governance Principles to enhance independent directors’ monitoring and supervisory power.

Originality/value

This is thought to be the first study to provide insights on how board independence influences dividend policy in controlling agency problems in Turkish family firms since Turkish authorities introduced compulsory rules on the employment of independent directors on boards.

Details

International Journal of Accounting & Information Management, vol. 29 no. 4
Type: Research Article
ISSN: 1834-7649

Keywords

Article
Publication date: 24 March 2021

Ruchi Moolchandani and Sujata Kar

This paper examines whether family control exerts any influence on corporate cash holdings in Indian listed firms. It also examines how this accumulated cash of family

Abstract

Purpose

This paper examines whether family control exerts any influence on corporate cash holdings in Indian listed firms. It also examines how this accumulated cash of family firms impacts firm value.

Design/methodology/approach

The study uses dynamic panel data regression estimated using two-step system generalized method of moments (GMM) on S&P BSE 500 firms during 2009–2018 for testing the repercussions of family control on the cash levels of a firm. Further, fixed effects regression has been employed for the valuation analysis.

Findings

Estimation results showed that family control negatively impacts cash holdings in Indian firms. Further, the cash accumulation by family firms adversely affects the market valuation of the firm. These findings signal a principal–principal (P-P) agency conflict in Indian family firms, i.e. friction between family owners and minority shareholders' interests. Minority shareholders fear that a part of the cash reserves will be used by family members for personal benefits. Thus, they discount cash reserves in family firms.

Originality/value

The study adds to the determinants of corporate cash holdings in emerging markets. To the best of the authors’ knowledge, this is the first study from India investigating family control as a determinant of cash policy. It sheds light on the P-P agency conflict in Indian family firms. P-P agency conflict is less researched in cash holdings literature as opposed to the principal–agent managerial disputes. Also, the study uses a more comprehensive definition of family control rather than just considering the ownership as used in prior cash holding research.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 6 July 2021

Mohammad Fuad, Vinod Thakur and Ashutosh Kumar Sinha

From the socioemotional wealth (SEW) perspective, family firms prioritize non-financial goals and show risk averse behaviour towards conducting acquisitions. In this…

Abstract

Purpose

From the socioemotional wealth (SEW) perspective, family firms prioritize non-financial goals and show risk averse behaviour towards conducting acquisitions. In this paper, we study family firms' acquisitive behaviour while participating in CBA waves. Scholars have largely treated the cross border acquisition (CBA) wave and non-wave environments as homogeneous. We theorize that these two environments differ in their uncertainty and risk profiles on account of temporal clustering of acquisition deals. Accordingly, based on the SEW perspective, we examine the preference of family firms to participate in CBA waves.

Design/methodology/approach

The paper is based on CBAs conducted by Indian family firms between 2000 and 2018. These waves are identified by conducting a simulation based methodology.

Findings

Our findings suggest that foreign institutional ownership, firm age and acquisition relatedness moderate the relationship between family control and participation in CBA waves.

Originality/value

Our paper contributes towards the acquisitive behavior of family firms and their participation in CBA waves.

Details

Cross Cultural & Strategic Management, vol. 28 no. 4
Type: Research Article
ISSN: 2059-5794

Keywords

Article
Publication date: 31 October 2018

Assil Guizani, Faten Lakhal and Nadia Lakhal

The purpose of this paper is to shed light on the effect of French family control on the cash flow sensitivity of cash (CFSC). It also investigates the moderating effect…

Abstract

Purpose

The purpose of this paper is to shed light on the effect of French family control on the cash flow sensitivity of cash (CFSC). It also investigates the moderating effect of board of directors’ features on this relation.

Design/methodology/approach

Based on a sample of French-listed companies from 2012 to 2014, the authors use GLS regression models on panel data estimated with robust standard errors, clustered at the firm level.

Findings

The results show that family control is positively associated with the CFSC. This finding suggests that families are likely to hold more cash out of their cash flows for entrenchment and expropriation purposes. A further analysis shows that board size, independence and the two-tier board structure negatively affect the CFSC in family firms. Board efficiency is then a guarantee of minority shareholders’ interests against family expropriation risks in France.

Research limitations/implications

These findings suggest that French family firms are likely to expropriate minority interests by extracting rents through their cash holding behavior. However, in the presence of high-quality board features, the relation turns negative, suggesting that the quality of the board is an efficient corporate governance device that is likely to monitor family corporate decisions.

Originality/value

This paper extends previous research by investigating the moderating effect of board features on the relation between family control and the CFSC. The research provides a metric for agency problems that is the sensitivity of cash to cash flows and offers theoretical support for the agency argument of hoarding cash.

Details

Managerial Finance, vol. 44 no. 11
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 6 April 2010

Lukas Setia‐Atmaja

This paper's aim is to examine whether board independence influences debt and dividend policies of family controlled firms.

3947

Abstract

Purpose

This paper's aim is to examine whether board independence influences debt and dividend policies of family controlled firms.

Design/methodology/approach

The paper examines panel data on a sample of Australian publicly‐listed firms over the period 2000‐2005 using panel (random effects) regression.

Findings

Empirical test demonstrates that family controlled firms appear to have higher levels of leverage and dividend payout ratios than their non‐family counterparts. More importantly, the result indicates that the positive impact of family control on dividend policy is due to the higher proportion of independent directors on family boards. This underlines the significant role that independent directors play in influencing firm's dividend policies, especially for family controlled firms. The result also supports the notion that independent directors and dividends are complementary government mechanisms. This paper, however, finds little evidence that board independence moderates the relationship between family control and debt.

Research limitations/implications

While not all family firms are the same, this research treats them as a homogeneous grouping (i.e. firms are delineated into family versus non‐family). The fact that family firms are difficult to identify and define (reflected in the diversity of definitions in the literature) may also affect the validity of studies of family business. For policy makers, the finding could serve to justify initiatives to encourage more independent directors on boards, especially in family controlled firms.

Originality/value

This paper provides evidence about the relationship between board independence, dividends and debt from a country with higher levels of private benefits of control, strong legal shareholder protection but less significant role of external governance mechanisms compared to the USA.

Details

International Journal of Managerial Finance, vol. 6 no. 2
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 1 August 2016

Doddy Setiawan, Bandi Bandi, Lian Kee Phua and Irwan Trinugroho

This research aims to examine the effect of ownership structure on dividend policy using the Indonesian context. The most common ownership structure is concentrated in the…

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Abstract

Purpose

This research aims to examine the effect of ownership structure on dividend policy using the Indonesian context. The most common ownership structure is concentrated in the hand of family owners except in the UK and USA (La Porta et al., 1998, 2000). Family owners hold more than half of the companies in Indonesia (Carney & Child, 2013; Claessens et al., 2000). Family firms play an important role in Indonesia. Another important characteristic that emerges is the rise of government- and foreign-controlled firms in Indonesia. Thus, this research also divides ownership concentration into family firms, government-controlled and foreign-controlled firms.

Design/methodology/approach

Samples of this research consist of dividend announcements during 2006-2012 in Indonesian Stock Exchange. This research excluded financial data because these have characteristics that are different non-financial sectors’ characteristics. The final sample of this research consists of a 710 firm-year observation.

Findings

The result of this research shows that ownerships have a positive effect on dividend payout. This research divides the sample into family-controlled firms, government-controlled firms (GOEs) and foreign-controlled firms. This research shows that government- and foreign-controlled firms have a positive impact on dividend payout. However, family firms have a negative effect on the dividend payout. Family firms pay lower dividends because they prefer to control it themselves. Family firms earn benefit from those resources, but at the expense of minority shareholders. Thus, family firms engage in expropriation to minority shareholders.

Research limitations/implications

This study focuses on ownership structure of Indonesian listed firm. This study does not analyze the impact of other corporate governance mechanism such as board structure on dividend decisions. The owner of the companies (family, government and foreign firm) has an opportunity to put their member as part of board members. However, this study does not analyze the impact of board structure on dividend decisions.

Originality/value

This study provides evidence that ownership concentration positively affects dividend payout. However, there is a different effect of ownership structure (family-controlled firms, GOEs and foreign-controlled firm). Government- and foreign-controlled have a positive effect; however, family-controlled firm have a negative effect on dividend payout. Therefore, this study provides evidence of the importance of ownership structure on dividend decision.

Details

Journal of Asia Business Studies, vol. 10 no. 3
Type: Research Article
ISSN: 1558-7894

Keywords

1 – 10 of over 89000