Founding Family Controlled Firms: Performance, Risk, and Value

McConaughy, Daniel L.; Matthews, Charles H.; Fialko, Anne S.

doi:10.1111/0447-2778.00004

Cited by 423 publications

(327 citation statements)

References 50 publications

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“…In the United States, Anderson and Reeb (2003b) found that while there is no difference in leverage, listed family firms are less diversified in terms of business segments relative to non-family firms. McConaughy et al (2001) provide evidence that family firms use significantly less debt with the difference even greater with respect to the use of short-term debt. In contrast, family firms that use control enhancing mechanisms are more leveraged (King and Santor 2008) and in periods of growth, family firms use more debt capital (Schulze et al 2003).…”

Section: Proposition 6 Family Firms' Cost Of Debt Is Lower Relative mentioning

confidence: 89%

Valuation of Family Firms: The Limitations of Accounting Information

Hasso

Duncan

2012

SSRN Journal

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This conceptual paper explores the extent to which reported accounting information captures unique family firm decision-making and intangible asset factors that impact financial value. We review the family firm valuation-relevant literature and identify that this body of research is predicated on the assumption that accounting information reflects the underlying reality of family firms. This research, however, fails to recognise that current accounting technology does not fully recognise the family firm factors in the book value of the firm or the implications for long run persistence of earnings. Thus, valuation models underpinning the extant empirical research, which are predicated on reported accounting information, may not fully reflect the intrinsic value of family firms. We present propositions on the interaction between accounting information, family factors and valuation as a road map for future empirical research with a discussion of appropriate methodologies.

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Section: Proposition 6 Family Firms' Cost Of Debt Is Lower Relative mentioning

confidence: 89%

Valuation of Family Firms: The Limitations of Accounting Information

Hasso

Duncan

2012

SSRN Journal

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“…There are some suggestions to address the topic of debt as a relevant factor for consideration [41,48], and the benefits that indebtedness may bring to family and non-family firms have been explored in the literature. The impact of periodic payments that debt frequently provokes diminishes free-cash flow and may lead to lower discretional behavior by management [49].…”

Section: Debtmentioning

confidence: 99%

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

Martín-Reyna

Durán-Encalada

2015

IJFS

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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.

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“…In fact, La Porta and Lopez-De-Silanes (1997) find that poorer investor protection by national legal systems is associated with smaller and more illiquid capital markets supporting the view that private finance could be vital and a scarce resource for corporate growth in these countries. In economies with immature capital markets and few professional managers, many family firms are established by obtaining capital and human investments from families and personal networks (McConaughy, Matthews, & Fialko, 2001). Furthermore, through business networks, uncertainties and complexity are reduced because information is shared and circulated among the participants in the network, resulting in better monitoring of activities both within and between firms.…”

Section: Theoretical Background and Research Hypothesesmentioning

confidence: 99%

Corporate Governance and Performance in Publicly Listed, Family-Controlled Firms: Evidence from Taiwan

Filatotchev

Lien

Piesse

2005

Asia Pacific J Manage

278

207

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Abstract. Using a multi-industry dataset of 228 firms listed on the Taiwan Stock Exchange (TSE) this paper analyses the effects of ownership structure and board characteristics on performance in large, publicly traded firms that are controlled by founding families. After taking account of possible endogeneity problems, we do not find that family control is associated with performance measured in terms of accounting ratios, sales per issued capital, earnings per share and market-to-book value. However, share ownership by institutional investors, and foreign financial institutions in particular, is associated with better performance. Our results indicate that board independence from founding family and board members' financial interests have a positive impact on performance.

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Founding Family Controlled Firms: Performance, Risk, and Value

Cited by 423 publications

References 50 publications

Valuation of Family Firms: The Limitations of Accounting Information

Valuation of Family Firms: The Limitations of Accounting Information

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

Corporate Governance and Performance in Publicly Listed, Family-Controlled Firms: Evidence from Taiwan

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