International Journal of Financial Studies

Editorial

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Open AccessEditorial

Performance and Behavior of Family Firms

by Esra Memili

Int. J. Financial Stud. 2015, 3(3), 423-430; https://doi.org/10.3390/ijfs3030423 - 9 Sep 2015

Cited by 4 | Viewed by 4808

Abstract

This Guest Editor’s note reflects on the contributions of each article in the Special Issue on family firms’ behavior and performance. Building on this, several under-researched areas concerning family involvement in businesses are identified and the resulting impact on firm behavior and performance [...] Read more.

This Guest Editor’s note reflects on the contributions of each article in the Special Issue on family firms’ behavior and performance. Building on this, several under-researched areas concerning family involvement in businesses are identified and the resulting impact on firm behavior and performance is explained. Finally, future research directions and insights for practitioners are outlined. Full article

(This article belongs to the Special Issue Performance and Behavior of Family Firms)

Research

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530 KiB

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Corporate Governance Provisions, Family Involvement, and Firm Performance in Publicly Traded Family Firms

by Esra Memili and Kaustav Misra

Int. J. Financial Stud. 2015, 3(3), 194-229; https://doi.org/10.3390/ijfs3030194 - 17 Jul 2015

Cited by 5 | Viewed by 7091

Abstract

This study examines the moderation effects of corporate governance provisions on the link between family involvement (i.e., family ownership and family management) in publicly-traded firms and firm performance by drawing upon agency theory, with a focus on principal-principal agency issues, and [...] Read more.

This study examines the moderation effects of corporate governance provisions on the link between family involvement (i.e., family ownership and family management) in publicly-traded firms and firm performance by drawing upon agency theory, with a focus on principal-principal agency issues, and the extant family governance literature. We develop and test the hypotheses on 386 of the S&P 500 firms longitudinally. Findings support the hypotheses suggesting the moderation effects of the use of provisions (a) protecting controlling owners in terms of their sustainability of controlling status, and (b) protecting management legally on the inverted U-shaped relationship between family ownership and firm performance. We also found support for the moderation effects of provisions (c) protecting controlling owners in terms of their voting rights, (d) protecting noncontrolling owners, and (e) protecting management monetarily on the inverted U-shaped relationship between family management and firm performance. By this, our study provides empirical support for the principal-principal agency perspective on the corporate governance in publicly-traded family firms. As such, it suggests new avenues of research for both the corporate governance literature, as well as for the theory of the family firm. Our study also offers insights to policy directed toward monitoring the actions of large shareholders such as family and enhancing the overall shareholder value in publicly-traded family firms. Full article

(This article belongs to the Special Issue Performance and Behavior of Family Firms)

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248 KiB

Open AccessArticle

Effects of Family Ownership, Debt and Board Composition on Mexican Firms Performance

by Juan Manuel San Martin-Reyna and Jorge A. Duran-Encalada

Int. J. Financial Stud. 2015, 3(1), 56-74; https://doi.org/10.3390/ijfs3010056 - 19 Mar 2015

Cited by 15 | Viewed by 7456

Abstract

This study examines the relationship between ownership structure and performance of public firms in Mexico, considering debt and the structure of the board of directors as contextual and institutional factors. This research seeks to explain the mixed results about the relationship of ownership [...] Read more.

This study examines the relationship between ownership structure and performance of public firms in Mexico, considering debt and the structure of the board of directors as contextual and institutional factors. This research seeks to explain the mixed results about the relationship of ownership and performance presented by other relevant studies in family and non-family businesses, mainly in emerging countries. The results confirm the positive association between family ownership concentration and performance, calculated by Tobin’s Q, showing how the participation of inside shareholders on the board and a low debt level contribute to higher performance. However, the association of these variables with performance shows a contrasting effect in the case of family as compared to non-family businesses. The particular corporate legal context in Mexico could be highlighted as one of the main reasons for these results. Full article

(This article belongs to the Special Issue Performance and Behavior of Family Firms)

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207 KiB

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Incumbent Decisions about Succession Transitions in Family Firms: A Conceptual Model

by Britta Boyd, Isabel C. Botero and Tomasz A. Fediuk

Int. J. Financial Stud. 2014, 2(4), 335-358; https://doi.org/10.3390/ijfs2040335 - 3 Nov 2014

Cited by 22 | Viewed by 10732

Abstract

In the family business literature, succession research has focused on the family member as they enter the leadership role or on the different issues that affect the succession process. Although researchers have acknowledged that succession in family businesses is “punctuated” by decision making [...] Read more.

In the family business literature, succession research has focused on the family member as they enter the leadership role or on the different issues that affect the succession process. Although researchers have acknowledged that succession in family businesses is “punctuated” by decision making events, less attention has been given to understanding how incumbents make decisions about ownership and management transitions. In an effort to continue to understand the succession process it is important to understand how incumbents make decisions about the type of transitions they intend to engage in (i.e., intra-family succession, out of family succession, or no succession). Building on the theory of planned behavior and the socioemotional wealth framework (SEW), this manuscript presents a conceptual framework to understand the factors that influence succession transitions and the role that contextual factors can play in this decision-making process. We present theory driven propositions and discuss the implications for understanding and evaluation of the succession process. Full article

(This article belongs to the Special Issue Performance and Behavior of Family Firms)

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233 KiB

Open AccessArticle

Capital Asset Pricing Model Testing at Warsaw Stock Exchange: Are Family Businesses the Remedy for Economic Recessions?

by Jacek Lipiec

Int. J. Financial Stud. 2014, 2(3), 266-279; https://doi.org/10.3390/ijfs2030266 - 22 Jul 2014

Cited by 5 | Viewed by 8306

Abstract

In this article, we test the capital asset pricing model (CAPM) on the Warsaw Stock Exchange (WSE) by measuring the performance of two portfolios composed of construction firms: family-controlled and nonfamily controlled. These portfolios were selected from the WIG-Construction (WIG—Warszawski Indeks Giełdowy—Warsaw Stock [...] Read more.

In this article, we test the capital asset pricing model (CAPM) on the Warsaw Stock Exchange (WSE) by measuring the performance of two portfolios composed of construction firms: family-controlled and nonfamily controlled. These portfolios were selected from the WIG-Construction (WIG—Warszawski Indeks Giełdowy—Warsaw Stock Exchange Index). The performance of both portfolios was measured in the period from 2006 to 2012 with respect to three sub-periods: (1) pre-crisis period: 2006–2007; (2) crisis period: 2008–2009; and (3) post-crisis period: 2010–2012. This division was constructed in this way to find out how family firms performed in crisis times in relation to nonfamily firms. In addition, the construction portfolio was chosen due to its sensitivity to recessions. When an economy faces a downturn, construction firms are among the first to be exposed to risk. The performance was measured by using the capital asset pricing model with statistical inference. We find that public family firms significantly outperformed non-family peers in the crisis times. Full article

(This article belongs to the Special Issue Performance and Behavior of Family Firms)

280 KiB

Open AccessArticle

The Corporate Social Responsibility of Family Businesses: An International Approach

by Gérard Hirigoyen and Thierry Poulain-Rehm

Int. J. Financial Stud. 2014, 2(3), 240-265; https://doi.org/10.3390/ijfs2030240 - 9 Jul 2014

Cited by 26 | Viewed by 8997

Abstract

This study analyzes the links between listed family businesses and social responsibility. On the theoretical level, it establishes a relationship between socioemotional wealth, proactive stakeholder engagement, and the social responsibility of family businesses. On a practical level, our results (obtained from a sample [...] Read more.

This study analyzes the links between listed family businesses and social responsibility. On the theoretical level, it establishes a relationship between socioemotional wealth, proactive stakeholder engagement, and the social responsibility of family businesses. On a practical level, our results (obtained from a sample of 363 companies) show that family businesses do not differ from non-family businesses in many dimensions of social responsibility. Moreover, family businesses have statistically significant lower ratings for four sub-dimensions of “corporate governance”, namely “balance of power and effectiveness of the Board”, “audit and control mechanisms”, “engagement with shareholders and shareholder structure”, and “executive compensation”. Full article

(This article belongs to the Special Issue Performance and Behavior of Family Firms)

298 KiB

Open AccessArticle

Socio Emotional Wealth Preservation in the REIT Industry: An Exploratory Study

by Magdy Noguera and Erick Paulo Cesar Chang

Int. J. Financial Stud. 2014, 2(3), 220-239; https://doi.org/10.3390/ijfs2030220 - 2 Jul 2014

Cited by 4 | Viewed by 6812

Abstract

Our study uses the Socio Emotional Wealth Perspective (SEW) to test our contention that Real Estate Investment Trust (REIT) founders are more inclined to satisfy first their non-economic goals rather than satisfying the economic goals of REIT shareholders. We test our hypotheses with [...] Read more.

Our study uses the Socio Emotional Wealth Perspective (SEW) to test our contention that Real Estate Investment Trust (REIT) founders are more inclined to satisfy first their non-economic goals rather than satisfying the economic goals of REIT shareholders. We test our hypotheses with an unbalanced panel dataset that includes an average of 66 publicly-traded equity REITs from 1999–2012 that produced 921 REIT-year observations. Our exploratory results provide evidence of SEW preservation as REITs led by founders’ successors tend to underperform; however, the family identification with the REIT affects performance positively. This is one of the first studies that merge the REIT and the family business streams of research. Future directions are suggested. Full article

(This article belongs to the Special Issue Performance and Behavior of Family Firms)

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179 KiB

Open AccessArticle

Family-Concentrated Ownership in Chinese PLCs: Does Ownership Concentration Always Enhance Corporate Value?

by Jin-Hui Luo and Heng Liu

Int. J. Financial Stud. 2014, 2(1), 103-121; https://doi.org/10.3390/ijfs2010103 - 28 Feb 2014

Cited by 5 | Viewed by 7036

Abstract

In this paper we investigate the relationship between family ownership structure and corporate value across a sample of 1314 firm-year observations of China’s family publicly listed companies (PLCs), from 2004 to 2008. We find a significant inverse-U-shaped relationship between the controlling family’s ultimate [...] Read more.

In this paper we investigate the relationship between family ownership structure and corporate value across a sample of 1314 firm-year observations of China’s family publicly listed companies (PLCs), from 2004 to 2008. We find a significant inverse-U-shaped relationship between the controlling family’s ultimate cash-flow rights and corporate value; as measured by Tobin’s Q. That is, as family-ownership concentration increases, corporate value first increases and then decreases. This finding refreshes our understanding of the relationship between family-ownership concentration and corporate value in emerging economies such as found in China. We corroborate prior findings that when controlling families hold excess control over cash-flow rights, corporate value is significantly lowered, while multiple large shareholders structure is significantly associated with higher corporate value. In addition; board independence is found to significantly improve corporate value in the context of family-concentrated ownership. We also test for potential endogeneity between family ownership and corporate value and find our results to be robust. Full article

(This article belongs to the Special Issue Performance and Behavior of Family Firms)

Review

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371 KiB

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Review of Family Business Definitions: Cluster Approach and Implications of Heterogeneous Application for Family Business Research

by Henrik Harms

Int. J. Financial Stud. 2014, 2(3), 280-314; https://doi.org/10.3390/ijfs2030280 - 23 Jul 2014

Cited by 50 | Viewed by 21442

Abstract

This review article displays several attempts to define family businesses as well as a systematization approach to get new insights about the relationship between family business definitions and their application under different conditions such as legal framework, culture or regional understanding of family. [...] Read more.

This review article displays several attempts to define family businesses as well as a systematization approach to get new insights about the relationship between family business definitions and their application under different conditions such as legal framework, culture or regional understanding of family. Potential explanations for the ambiguity of what is meant by family firms are revealed by reviewing 267 journal articles. A consensus about the object of investigation would result in a deeper understanding of family firms’ uniqueness, might lead to more reliable comparative studies as well as interdisciplinary work (e.g., finance and family firms) and enables a quicker consolidation of family business research, especially in contrast to research on small and medium-sized enterprises and entrepreneurship. Therefore, the present review contributes to the development of family business research by providing an initial attempt to comprehensively systematized existing family firm definitions which could be used by researchers in family business research. Full article

(This article belongs to the Special Issue Performance and Behavior of Family Firms)

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