Search results

The chapter investigates three channels through which private benefits are hypothesized to be extracted in dual class companies: excess executive compensation, excess capital expenditures and excess cash holdings.

With a propensity score matched sample of S&P 1500 dual class and single class companies with concentrated control, the chapter analyzes the relationship between the valuation discount of dual class companies and measures of excess executive compensation, excess capital expenditure and excess cash holdings.

Executives in dual class firms earn greater compensation relative to their counterparts in single class firms. This excess compensation is more pronounced when the executive is a family member. The value of dual class shares is discounted most when cash holdings and executive compensation of dual class are excessive. Excess compensation is highest for executives who are family members of dual class companies. The dual class discount is not related to excess capital expenditures.

The research shows that the discount in the value of dual class shares in relation to the value of closely controlled single class company shares is directly related to the channels through which controlling shareholder-managers can extract private benefits.

The main purpose of the study is to examine the influence of family directors on the firm performance of public listed companies (PLCs) in Malaysia. This study provides empirical evidence on the agency problems between controlling shareholders and minority interests in the concentrated ownership setting.

Samples of the study are 112 PLCs in year 2006. Two measures of firm performance are used: return on assets (ROA) and Tobin’s Q. Managerial ownership refers to the percentage shareholdings of executive directors with direct and indirect holdings. It was further categorized into family ownership and non-family ownership.

In relation to ROA, managerial ownership is found positively significant. The results also show that the positive relationship between managerial ownership is contributed by the managerial-non-family ownership. In relation to Tobin’s Q, the results show a U-shape with turning point at 31.38% for managerial ownership and 28.29% for the managerial-family ownership. The results found significant and positive relationships between managerial ownership and both measures of firm performance which indicates that managerial ownership and family ownership yield greater efficiency.

The study highlights the effects of corporate governance on ROA and Tobin’s Q are somewhat different. It provides some evidence on the need to use appropriate measure of firm performance. The significant relationship supports the argument of Chami (1999), Fama and Jensen (1983), and DeAngelo and DeAngelo (1985) and empirical evidence of Lee (2004) that family ownership enhances monitoring activities.

Differentiating the types of managerial ownership into family and non-family categories enriches our knowledge about who actually contributes to the improved performance.

The board of directors of a firm is a governing body exercising key top-level decisions. Due to the involvement of the controlling families, boards of directors of family firms have been found to behave differently than those of other organizations. Besides family control, national and/or regional contexts have been suggested to influence how companies are governed. Boards of directors of family firms have been studied mostly in developed regions and knowledge from developing regions such as Latin America is scarce. This chapter summarizes the main findings about boards of directors in family firms and compares this research with our knowledge from Latin America. It discusses the different challenges and opportunities that owners of family firms and boards of directors face in the Latin American context. Finally, it suggests that research on boards of directors of family firms in Latin America has a very promising future as it still has to validate and/or contextualize findings in developed regions, overcome some theoretical and empirical limitations, explore some salient characteristics related to the institutional context in depth, and provide recommendations linking board characteristics and firm performance.

The purpose of this paper is to examine the influence of family directors and independent directors on executive remuneration of listed family firms in Malaysia, and their involvement in remuneration committee on executive remuneration.

Fixed effect estimation is employed to examine 1,395 firm-year observations from 2010 to 2014.

Family and independent directors do not have statistically significant influence on executive remuneration. Rather, family ownership exerts a significant positive influence on executive remuneration. This study also reveals that the interaction of family CEOs with the family directors on remuneration committee exerts a significant positive influence on executive remuneration.

The measurement of executive remuneration excludes the share options due to the non-disclosure of this information in the annual reports.

The findings would be useful to the policy-makers and regulators in appraising the governance measures of remuneration arrangement.

This study premises on the Type II agency conflict between controlling shareholders and minority shareholders. Independent directors could not mitigate the Type II agency conflict via the governance of executive remuneration. They are not the effective governance mechanism that the minority shareholders can rely on. The additional analyses provide theoretical implication that the pervasive Type II agency conflict is ameliorated when the CEOs do not have family relationships with the controlling family shareholders.

This study aims at examining the level of risk of disclosure practices and the effect of four board of directors' characteristics (board size, board meetings, CEO duality and board expertise) on these practices in the Jordanian context. This study also adds to the body of literature by examining the moderating effect of family ownership on the relationship between the board of directors' characteristics and the corporate risk disclosure.

The sample of this study contains the non-financial Jordanian firms listed on Amman Stock Exchange (ASE). 376 annual reports of the sampled firms over four years from 2014 to 2017 were used. The content analysis approach was used to collect data and to determine the level of risk disclosure by computing the number of risk-related sentences in the annual reporting. To test the study's hypothesis, the random effect model was employed.

The empirical results show that the total of the risk disclosure sentences for each firm ranges from a minimum value of 2 sentences to a maximum value of 61 sentences, and the mean of CRD is 28 sentences. The results also indicate that the board expertise is positively related with the level of risk disclosure. Conversely, CEO duality has a negative impact on the risk disclosure practices. However, the results failed to support that the board size and the board meetings have a significant effect on the level of risk disclosure. Furthermore, the study demonstrated that the family ownership moderates the relationship between the board of directors and the corporate risk disclosure.

The 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.

The current study contributes to the literature of risk disclosure because the previous research has paid little attention to this topic in Jordan. To the best knowledge of the researcher, this study is the first Jordanian study that focuses on examining the relationship between the board of directors' characteristics and the corporate risk disclosure in the non-financial sector. Furthermore, it is the first study that examines the moderating role of family ownership on such relationships. Consequently, the results of the current study draw attention to the CRD practices and the monitoring role of board of directors in Jordan.

This paper aims to examine the impact of female board directorship on the extent of earnings management.

The research hypotheses have been tested using both univariate and multivariate analyzes based on a sample of 198 firm-year observations from closely-held family firms listed on the SBF 120 over the period 2010–2018.

The empirical results first indicate that female board participation reduces the level of earnings management. When looking at women positions in the companies’ boardrooms, the authors reveal that the negative linkage between female board directorship and earnings management remains constant for independent female directors while the opposite holds for their family-affiliated counterparts. Further, the gender quota reform is shown to mitigate the adverse relationship between gender-diverse corporate boards and the extent of earnings management. These results seem sound, as they hold unchanged for the several measures of, both, boardroom gender diversity and earnings management used in the empirical study. In a supplementary analysis, the authors provide evidence that the association between the presence of women directors on the companies’ boards and earnings management depends, in a different way, on the size of the audit firm in a joint auditing context.

The country and the period considered in this paper are noteworthy characteristics that enhance the value of this research. The present study is relevant because it examines the relationship between female boardroom participation and earnings management using a homogeneous sample of family-owned and -managed companies within which shareholders and board members share identical motives for manipulating earnings in one of the leading countries in the world with regard to family ownership dominance (i.e. France). Moreover, this paper is considered to be very timely, as it explores, contrarily to previous related studies, the years following the implementation of a mandatory gender quota reform in one of the less available countries, to date, that have amended a gender quota law. To the knowledge, besides France, there are a few markets (Norway, Belgium, Finland and Iceland) that have implemented such legislation.

This paper aims to investigate the impact of female director affiliations to governing families on corporate social responsibility (CSR) disclosures in the context of Bangladeshi firms.

This study uses a quantitative empirical research method grounded in Socioemotional Wealth (SEW) theory. Data was sourced from Bangladeshi publicly listed non-financial sector companies’ annual reports and stock exchange trading and publication reports and consists of 2,637 firm-year observations from 1996 to 2011. Pooled multivariate regression models are used to test the association between corporate social and environmental disclosure and female directors, and the family affiliation (or not) of those directors.

The findings provide strong evidence that female directors who are affiliated to the governing family, founders and other board members reduce CSR disclosure in family firms; unaffiliated female board directors enhance CSR disclosure, and this effect is significant in both family and non-family firms.

Definitions of family firms and affiliated directors may lead to over-generalization in the results.

The study highlights variation in the nature of female board appointments in emerging market family-controlled firms. The findings bring attention to the role of affiliated female director appointments in family ownership structures and speak directly to family business owners, advisors and policy makers about the importance of unaffiliated female directors as catalysts of improved CSR disclosure in family and non-family firms.

The purpose of this paper is to elaborate a political economy of corporate governance (CG) change and stability in family business groups (BGs) and assist in explaining why certain CG reforms fail in one context but work in others.

Three BGs in Bangladesh are studied. A mixture of data sources is used, namely interviews, observations of practices, historical documentation, company reports and research papers and theses. The results are analysed by applying Archer’s morphogenetic approach, focussing on both macro- and micro-processes of change.

A newly-adopted CG framework, which created incentives and pressures for family directors to act in the best interests of general shareholders, did not seem to alter apparently simple but complex internal structural set-ups. Thus, regulatory efforts to empower general shareholders did not produce the expected results. Following Archer’s morphogenetic approach, the authors identify key structural conditioning or emergent properties and agential strategies to explain why and how BGs opted for symbolic compliance and achieved lax regulation and enforcement.

The paper opens up a new methodological and theoretical space for future CG research, especially by applying a meta-theoretical guideline such as the morphogenetic approach, for nuanced explanation and a more inclusive understanding of CG practices, reform and change in different organisational and institutional settings.

The morphogenetic approach aids in developing a political economy of CG change and stability and provides a nuanced explanation of CG practices. This is illustrated through an exploration of CG change initiatives in Bangladeshi BGs.

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.

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.

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.

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.

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.

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.

The purpose of the paper is to examine the association between internal control quality (ICQ) and audit report lag (ARL) and to test whether family directors affect the relationship.

ICQ is measured by using the framework developed by Michelon et al. (2015), while ARL is measured as the number of days from fiscal year-end to the date of the auditor's report.

Using a sample of 190 French companies over the period of 2016–2019, the authors document that ICQ is negatively associated with ARL, suggesting that ICQ represents a key determinant of audit delay. When testing for the moderating effect of family directors on this relationship, findings show that under high percentage of family directors on the board, this relationship becomes insignificant.

This paper extends previous research on audit delays by investigating the moderating effect of family directors on the relation between ICQ and ARL in the French setting. The empirical evidence highlights the adverse effect of the concentration of family directors on the board on timely disclosure as proxied by ARL.