Does Family Control Matter? International Evidence from the 2008–2009 Financial Crisis

Lins, Karl V.; Volpin, Paolo F.; Wagner, Hannes F.

doi:10.1093/rfs/hht044

Cited by 322 publications

(140 citation statements)

References 77 publications

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“…In the main, agency theory suggests that controlling families have incentive to use firm resources to enhance their welfare (Carrasco-Hernandez & Sánchez-Marín, 2007;Chrisman, Memili, & Misra, 2014;Le Breton-Miller et al, 2011). For example, La Porta, Lopez-de-Silanes, and Shleifer (1999) and Lins, Volpin, and Wagner (2013) identify a variety of practices that allow family members to extract dividends and perquisites from firms they control in amounts that exceed their cash flow rights, and document that such practices are pervasive. Agency perspectives also lead us to anticipate that family firms will be more risk averse than nonfamily firms.…”

Section: Financial Stewardship In Family Firmsmentioning

confidence: 99%

Are Family Firms Good Employers?

Neckebrouck

Schulze

Zellweger

2018

AMJ

187

174

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Family firms employ about 60 percent of the global workforce. While it is widely assumed that they are good employers, data about their conduct is mixed. In this study, we extend stewardship and agency theories to test competing propositions about the impact of family on employment practices using data from 14,961 private Belgian firms over a 19-year period. Higher investments, lower dividend payout, and higher risk tolerance indicate that family firms are better financial stewards of their companies than nonfamily firms. However, family firms are worse organizational stewards than nonfamily firms: They offer lower compensation, invest less in employee training, and exhibit higher voluntary turnover and lower labor productivity. Further, and contrary to earlier research, we find that financial practices in private family firms do not change over time, and that the deleterious influence of family on employment practices rises with both firm age and with heightened family involvement. Together, our findings suggest that a more nuanced understanding of stewardship and agency theory is needed to understand the impact of family on the governance of private firms

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Section: Financial Stewardship In Family Firmsmentioning

confidence: 99%

Are Family Firms Good Employers?

Neckebrouck

Schulze

Zellweger

2018

AMJ

187

174

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“…Asia accounts for a total of 14 studies, focusing primarily on Japan (6 publications). Only ten articles handle samples of more than ten countries (Acharya and Subramanian 2009;Atanassov and Kim 2009;Faccio et al 2006;Lel and Miller 2008;Lin et al 2006;Lins et al 2013;McDonald and Westphal 2003;Sarkar et al 2006;Tong and Wei 2011;van Witteloostuijn 1998). The overall distribution of regional focus indicates a clear Anglo-American bias of empirical research on the topic, independent of the research field.…”

Section: Sample Sizementioning

confidence: 99%

“…Moreover, Furrer et al (2007) postulate that CAPEX negatively relates to market performance in the years immediately after a turnaround, and only reveals positive effects in subsequent mid-term years. Hence, significant performance enhancement can be expected only if accompanied by strategic asset retrenchment or portfolio restructuring (Lins et al 2013;Pearce and Robbins 1993). Further, firms in distress often cannot increase CAPEX due to immediate cash flow constraints.…”

Section: Capital Expendituresmentioning

confidence: 99%

Corporate distress and turnaround: integrating the literature and directing future research

Schweizer

Nienhaus

2017

Bus Res

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The topic of corporate distress and turnaround has been of interest to organizational change theory for many decades. This article considers existing reviews in discussing the current body of turnaround literature across multiple research fields and structures its work along a holistic framework. The numerous facets of corporate turnaround, resorting to general corporate restructuring research classifications, are clustered in a more detailed manner than those that merely rely on two commonly employed turnaround dimensions: ''retrenchment'' and ''recovery.'' The authors develop an agenda for future research based on this cross-disciplinary literature aggregation by highlighting current gaps and offering potential research questions. The review contributes to the understanding of corporate distress and turnaround by integrating different research streams. Additionally, the work emphasizes the need for further harmonization and operationalization in turnaround success metrics.

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“…The empirical evidence shows that family owners of such firms may divert cash to serve their own liquidity needs or projects of private interest (e.g. Lins et al, 2013, Betrand et al, 2002 Many of such powerful families often form close ties with the Government to pursue rent seeking activities especially in weaker legal regimes (e.g., Faccio, 2006, Khanna and Yafeh, 2007, Morck and Yeung 2004 and family insiders can expropriate other stakeholders without fearing regulatory punishment (Liu et al, 2015). The overall evidence of cash holding pattern of politically connected firms is also mixed and it varies across countries.…”

Section: Family Ownership and Political Connectionsmentioning

confidence: 99%

Corporate cash holdings: Causes and consequences

Amess

Banerji

Lampousis

2015

International Review of Financial Analysis

126

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The considerable growth in corporate cash holdings around the world has prompted scholarly interest. Consequently, there is now a large academic literature examining cash holdings and their impact on corporate outcomes and firm values. This article reviews and synthesizes the literature to offer insight into two primary motives to hold cash: precautionary and agency. We first present a stylized model that explores the trade-off in holding cash between these two motives and then examine empirical studies to determine how existing theories are supported by evidence using data from a variety of countries. In addition, we examine the effectiveness of a variety of corporate governance devices in curtailing cash holdings and also the extent to which these devices offer investors' confidence that cash will not be wasted. Finally, we discuss methodological and measurement issues associated with empirical cash holdings studies. JEL classification: G30; G32

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Does Family Control Matter? International Evidence from the 2008–2009 Financial Crisis

Abstract: This is the unspecified version of the paper. This version of the publication may differ from the final published version. Permanent repository link: http://openaccess.city.ac.uk/3266/ Link to published version: http://dx.

Cited by 322 publications

References 77 publications

Are Family Firms Good Employers?

Are Family Firms Good Employers?

Corporate distress and turnaround: integrating the literature and directing future research

Corporate cash holdings: Causes and consequences

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