Hostname: page-component-cd9895bd7-dk4vv Total loading time: 0 Render date: 2024-12-27T10:51:54.627Z Has data issue: false hasContentIssue false
  • English
  • Français

Do families shape corporate governance structures?

Published online by Cambridge University Press:  02 February 2015

María Sacristán Navarro  and
Silvia Gómez Ansón
María Sacristán Navarro
Affiliation:
Department of Business Administration, Rey Juan Carlos University, Madrid, Spain
Silvia Gómez Ansón
Affiliation:
Department of Business Administration, University of Oviedo, Oviedo, Spain
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper provides empirical evidence of family firm corporate governance structures, by examining a set of corporate governance characteristics of 132 non-financial Spanish listed firms. Results show that family firm boards present differential characteristics and that different patterns of family ownership configurations do not affect family firm corporate governance structures. We find that Spanish family firm boards are smaller than those in non-family firms. Family firm directors own a larger fraction of firm shares and have longer Chairman tenure than non-family firms, and family firms use fewer voluntary board committees – such as nomination and remuneration committees and executive committees. Besides, family firm boards and committees are biased towards insiders. Whether these differential characteristics affect other minority non-family shareholders negatively remains an open question.

Keywords

family firmscorporate governanceboard compositionboard committees
Type
Research Article
Information
Journal of Management & Organization , Volume 15 , Issue 3 , July 2009 , pp. 327 - 345
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2009

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Ali, A, Chen, TY and Rodhakrishnan, S (2007) Corporate disclosures by family firms, Journal of Accounting and Economics 44(1-2): 238–286.Google Scholar
Anderson, RC and Reeb, DM (2003) Founding-family ownership and firm performance: evidence from the S&P 500, Journal of Finance LVIII (3): 1301–1328.Google Scholar
Anderson, RC and Reeb, DM (2004) Board composition: balancing family influence in S&P 500 firms, Administrative Science Quarterly 49: 209–237.Google Scholar
Barney, J and Hansen, M (1994) Trust worthiness as a source of competitive advantage, Strategic Management Journal 15: 175–190.Google Scholar
Barnhart, SW, Marr, MW and Rosenstein, S (1994) Firm performance and board composition: some new evidence, Managerial and Decision Economics 15: 329–340.Google Scholar
Barth, E, Gulbrandsen, T and Schonea, P (2005) Family ownership and productivity: the role of owner management, Journal of Corporate Finance 11: 107–127.Google Scholar
Bartholomeusz, S and Tanewski, GA (2006) The relationship between family firms and corporate governance, Journal of Small Business Management 44(2): 245–267.Google Scholar
Bennedsen, M, Meisner, K, Pérez-González, F and Wolfenzon, D (2006) Inside the Family Firm: The role of families in succession decisions and performance. Finance Working Paper No.132 (http://ssrn.com/abstract_id=925650).Google Scholar
Brickley, J, Coles, JL and Jarrell, G (1997) Leadership structure: Separating the CEO and Chairman of the Board, Journal of Corporate Finance 3: 189–220.Google Scholar
Bukart, M, Panunzi, F and Shleifer, A (2003) Family Firms, Journal of Finance LVIII (5): 2167–2201.Google Scholar
Carney, M (2005) Corporate governance and competitive advantage in family controlled firms, Entre-preneurship Theory and Practice, 29(3): 249–265.Google Scholar
Chrisman, JJ, Steier, LP and Chua, JH (2006) Personalism, particularism and the competitive behaviours and advantages of family firms: an introduction, Entrepreneurship Theory and Practice 30(6): 719–729.Google Scholar
Claessens, S, Djankov, S, Fan, J and Lang, LH (2002) Disentangling the incentive and entrenchment effects of large shareholders, Journal of Finance LVII (6): 2741–2771.Google Scholar
Corbetta, G and Salvato, C (2004) The board of directors in family firms: one size fits all? Family Business Review 17: 119–134.Google Scholar
Dalton, DR and Kesner, IF (1987) Composition and CEO duality in boards of directors: an international perspective, Journal of International Business Studies 18(3): 33–42.Google Scholar
Davis, JA and Taguiri, R (1989) The influence of life stage on father-son work relationships in family companies, Family Business Review 2: 47–74.Google Scholar
Davis, JH, Schoorman, FD and Donaldson, L (1997) The distinctiveness of agency theory and stewardship theory, Academy Management Review 22(3): 611–613.Google Scholar
Donckels, R and Frohlick, E (1991) Are family business really different? European experiences from STRATOS, Family Business Review 4(2): 149–160.Google Scholar
Eisenberg, T, Sundge, S and Wells, M (1998) Larger board size and decreasing firm value in small firms, Journal of Financial Economics 48: 35–54.Google Scholar
Ellul, A, Guntay, L and Lei, V (2006) ‘External governance and debt agency costs of family firms’. Paper presented at the conference on Corporate Governance in Family/unlisted firms, Bern, Switzerland.Google Scholar
Faccio, M and Lang, L (2002) The ultimate ownership of western European corporations, Journal of Financial Economics 65: 365–395.Google Scholar
Fama, EF and Jensen, MC (1983) Separation of ownership and control, Journal of Law and Economics 26: 301–326.Google Scholar
Fernández, AI, Gómez-Ansón, S and Fernández Méndez, C (1998) El papel supervisor del consejo de administración sobre la actuación gerencial. Evidencia para el caso español, Investigaciones Económicas 22(3): 501–516.Google Scholar
Franks, J and Mayer, C (1997) Corporate ownership and control in the UK, Germany and France, Journal of Applied Corporate Finance 9: 30–45.Google Scholar
Galve, C and Salas Fumás, V (1993) Propiedad y resultados de la gran empresa española, Investigaciones Económicas XVII (2): 207–238.Google Scholar
Gnan, L, Schultze, W, Montemerlo, D and Corbetta, G (2004) Governance structures in Italian Family SMEs, in Tomaselli, LM (eds) Family firms in the wind of change, FBN Conference Proceedings, Copenhagen.Google Scholar
Habbershon, TG and Williams, ML (1999) A resource-based framework for assessing the strategic advantages of family firms, Family Business Review 12(1): 1–25.Google Scholar
Hermalin, B and Weisbach, M (1988) The determinants of board composition, Rand Journal of Economics 19(4): 589–606.Google Scholar
Hermalin, BE and Weisbach, MS (2001) Board of directors as an endogenously determined institution: a survey of the economics literature. NBER Working Paper 816.Google Scholar
Hillier, DJ and McColgan, PML (2004) Firm Performance, Entrenchment and Managerial Succession in Family Firms. Accessed at http://ssrn.com/abstract=650161Google Scholar
Hillman, AJ, Cannella, AA and Paerzold, RL (2000) The resource dependence role of corporate directors: strategic adaptation of board composition in response to environmental change, Journal of Management Studies 37(2): 235–255.Google Scholar
Jaskiewicz, P and Klein, S (2007) The impact of goal alignment on board composition and board size in Family Business, Journal of Business Research 60(10): 1080–1089.Google Scholar
Jayaraman, NA, Khorana, E and Covin, J (2000) CEO founder status and firm financial performance, Strategic Management Journal 21: 1215–1224.Google Scholar
Jensen, M (1993) The modern industrial revolution, exit, and the failure of internal control systems, Journal of Finance 48(3): 831–880.Google Scholar
Klein, A (1998) Firm performance and board committee structure, Journal of Law and Economics 41: 275–299.Google Scholar
Klein, A (2002) Audit committee, board of director characteristic and earnings management, Journal of Accounting and Economics 33(3): 375–400.Google Scholar
Klein, P, Shapiro, D and Young, J (2005) Corporate governance, family ownership and firm value: the Canadian evidence, Corporate Governance 13(6): 769–784.Google Scholar
Kose, J and Lemma, W (1998) Corporate governance and board effectiveness, Journal of Banking and Finance 22: 371–403.Google Scholar
La Porta, R, López de Silanes, F, Shleifer, A and Vishny, R (1997) Legal determinants of external finance, Journal of Finance 52: 1131–1150.Google Scholar
La Porta, R, López de Silanes, F, Shleifer, A and Vishny, R. (1998) Law and finance, Journal of Political Economy 106: 1113–1155.Google Scholar
La Porta, R, López de Silanes, F, Shleifer, A and Vishny, R (2000) Investor protection and corporate governance, Journal of Financial Economics 58: 3–27.Google Scholar
La Porta, R, López de Silanes, F and Shleifer, A (1999) Corporate ownership around the world, Journal of Finance LIV (2): 471–479.Google Scholar
Lane, S, Astrachan, J, Keyt, A and McMillan, K (2006) Guidelines for family business boards of directors, Family Business Review 19(2): 147–167.Google Scholar
Le Breton-Miller, I and Miller, D (2006) Why do some businesses out-compete? Governance, long-term orientations, and sustainable capability?, Entrepreneurship: Theory and Practice (11): 731–746.Google Scholar
Lester, RK and Cannella, AA (2006) Interorganizational familiness: how family firms use interlocking directorates to build community-level social capital, Entrepreneurship: Theory and Practice 30: 755–775.Google Scholar
Macey, J. and O'Hara, M. (2003) The corporate Governance of Banks, FRBNY. Economic Policy Review, 9(1): 91–107.Google Scholar
Martin de Holan, P and Sanz, L (2006) Protected by the family? How closely held family protect minority shareholders, Journal of Business Research 59: 356–359.Google Scholar
Maury, B (2005) Family ownership and firm performance: empirical evidence from western European corporations, Journal of Corporate Finance 12: 321–341.Google Scholar
Morck, R and Yeung, B (2003) Agency problems in large family groups, Entrepreneurship: Theory and Practice 27: 367–382.Google Scholar
Prowse, S.D. (1997) Corporate control in commercial banks. Journal of Financial Research, XX(4): 509–527.Google Scholar
Ricart, JE, Álvarez, JL and Gallo, MA (1999) Governance mechanisms for effective leadership: the case of Spain, Corporate Governance 7(3): 266–287.Google Scholar
Rosenstein, S and Wyatt, JG (1990) Outside directors, board independence and shareholder wealth, Journal of Financial Economics 26: 175–191.Google Scholar
Sacristán, M and Gómez Ansón, S (2006) Family ownership, corporate governance and firm value, in Pannikkos, Z, Smyrnios, KX and Klein, S (eds) Handbook of Research on Family Business, pp. 593–613, Edward Elgar, Cheltenham.Google Scholar
Sacristán, M and Gómez Ansón, S (2007) Family ownership and pyramids in the Spanish market, Family Business Review 20(3): 247–265.Google Scholar
Schulze, W, Lubatkin, MH, Dino, RN and Buchhaltz, AK (2001) Agency relationships in family firms: Theory and evidence, Organization Science 12(2): 99–116.Google Scholar
Shivdasani, A and Yermack, D (1999) CEO involvement in the selection of new board members: an empirical analysis, Journal of Finance 54 (5): 1829–1853.Google Scholar
Shleifer, A and Vishny, RW (1997) A survey of corporate governance, Journal of Finance 52: 737–83.Google Scholar
Sraer, D and Thersmar, D (2004) Performance and behaviour of family firms: evidence from the French stock market. WP Centre de Reserche en Economie et Statistique, Tolouse, France.Google Scholar
Stoney, C. and Winstanley, D. (2001) Stakeholding: confusion or utopia? Mapping the conceptual terrain. Journal of Management Studies, 38(5): 602–626.Google Scholar
Sundaramurthy, C and Lewis, M (2003) Control and Collaboration paradoxes of governance, Academy of Management Review 28(3): 397–415.Google Scholar
Villalonga, B and Amit, R (2006) How do family ownership, control and management affect firm value?, Journal of Financial Economics 80(2): 385–417.Google Scholar
Voordeckers, W., Van Gils, A. and Van den Heuvel, J. (2007) Board composition in small and medium sized family firms. Journal of Small Business Management, 45: 137–156.Google Scholar
Yermack, D (1996) Higher market valuation of companies with a small board of directors, Journal of Financial Economics 40: 185–211.Google Scholar