Financial reporting quality, family ownership, and investment efficiency

Abstract

Purpose The purpose of this paper is to empirically investigate the impact of two monitoring mechanisms: family ownership (FO) and financial reporting quality (FRQ) on investment efficiency (IE) over the period of 2007–2014 for listed firms on the Pakistan Stock Exchange. Design/methodology/approach The authors employ two-dimensional pooled OLS cluster at the firm and year level, two-stage least square regression and feasible generalized lease square regression regression methods. Findings The findings suggest that higher FRQ and FO are associated with higher IE. Further, the authors report that higher FRQ and FO mitigate over- and under-investment. The impact of FRQ on IE is stronger (weaker) for family-controlled businesses. The results for these particular estimates are robust for alternative estimation techniques and measures of FRQ and FO. Originality/value The study draws on both agency and behavioral agency theories and therefore contributes to the literature in the following ways. First, the authors examine a relationship between FRQ and IE. Second, the authors test the impact of FO on IE. Third, the authors test the moderating impact of FO on the relationship between FRQ and the IE of family and non-family firms in relatively less regulated emerging market.

Family Business Control, Strategy Selection and Strategic Performance Measurement Usage

“…Furthermore, (Sbarba and Marelli, 2018) explain that the characteristics of family business management can have a different effect on control practices in companies than in non-family company management. This is supported by (Shahzad et al, 2019) which explain that the discussion about strategic decisions related to financial matters as well as corporate accounting practices in family and non-family controlled businesses has become a very important theme today. Another characteristic of the differences between family and non-family businesses can be seen based on considerations in strategic decision making.…”

“…The character of the family business can have a different effect on control practices in the company than in the management of nonfamily companies (Sbarba and Marelli, 2018). The findings of (Shahzad et al, 2019) explain that strategic decisions related to financial matters and corporate accounting practices are controlled by families. Based on this description, the hypotheses to be proven in this study are: H1: The role of the owner in managing the family business affects the decision to use the strategic performance measurement of the family business.…”

Does corporate social responsibility mediate the influence of national culture on investment inefficiency? Firm‐level evidence from Asia Pacific

“…Tobin Q (Tobin Q) is considered a proxy for a firm's growth opportunities, since Chen et al (2011) found that growth firms are more prone to inefficient investments. As per prior research, we also include firm size (FS), loss (POL), ROA volatility (ROA VOLT), CASH volatility (CASH VOLT) and cash‐to‐total assets (CASH TOTAL) to control for the effect of these variables on investment inefficiency (Benlemlih & Bitar, 2018; Shahzad, Rehman, Colombage, & Nawaz, 2019).…”

أثر الملکية الإدارية على العلاقة بين إدراج الشرکات بالمؤشر المصرى للمسئولية الاجتماعية وکفاءة الاستثمار: دراسة تطبيقية

“…) (Mandacı and Gumus, 2010) Convergence of Interests (Navissi and Naiker, 2006) (Withisuphakorn and Jiraporn, 2018) Ang et al (2000) ( Shahzad et al, 2018) (Javeed and Lefen, 2019) Agency problem I (Jensen and Meckling, 1976 2021) (Barnea and Rubin, 2010) (Jensen and Meckling, 1976) (Mueller and Spitz-Oener, 2006) Agency problem II (Shahzad et al, 2019) Barnea and Rubin (2010) Insider (e.g. Samet and Jarboui, 2017;Benlemlih and Bitar;2018;Cook et al, 2018;Liu and Tian, 2019; (e.g.…”

“…Samet and Jarboui, 2017;Benlemlih and Bitar;2018;Cook et al, 2018;Liu and Tian, 2019; (e.g. Shahzad et al, 2018) (e.g. Benlemlih and Bitar, 2018;Cook et al, 2018;Zeng et al 2019) (Nor et al, 2017;Nurleni et al, 2018;Rashed et al, 2018) .…”