Management succession and financial performance of family controlled firms

Smith, Brian F.; Amoako‐Adu, Ben

doi:10.1016/s0929-1199(99)00010-3

Cited by 275 publications

(182 citation statements)

References 23 publications

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“…Research from North America (e.g. Morck et al, 1988, Smith & Amoako-Adu, 1999, India (Vissa, Greve & Chen, 2010) and South-East Asia (e.g., Filatotchev et al, 2005; provides evidence of the negative effect of a controlling family on corporate performance. Here family interests may dominate over the interests of non-family shareholders, since the concentration of personal and family wealth in family-controlled firms normally creates a preference for wealth distribution towards dominant owners over other dimensions of firm performance, such as maximization of dividend payments to outside shareholders (Carney & Gedajlovic, 2002).…”

Section: The Governance Roles Of Dominant Shareholders and Investor Pmentioning

confidence: 99%

Corporate governance and national institutions: A review and emerging research agenda

2012

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Section: The Governance Roles Of Dominant Shareholders and Investor Pmentioning

confidence: 99%

Corporate governance and national institutions: A review and emerging research agenda

2012

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“…Research from North America in particular, (e.g. Morck, Shleifer, & Vishny, 1988, Smith & Amoako-Adu, 1999 provides evidence of the negative effect of a controlling family on corporate performance. In addition, strategy research identifies family firms to be altruistic in the relationship between parents and their children (Schulze, Lubatkin, Dino, & Buchholtz, 2001), which may have an impact on the effective succession process when the founder retires.…”

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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“…The family last name is also commonly used in the company name suggesting the close tie between the family and the firm. Further, monitoring and disciplining the management, often family members, by family members may be efficient not only because of the close interaction of family members, but also family members have excellent information on the firm, as a result of a long term relationship with the top management of the firm (Smith and Amoako-Adu, 1999). …”

Section: Types Of Controlling Shareholders and Agency Costsmentioning

confidence: 99%

Controlling shareholders and corporate value: Evidence from Thailand

Wiwattanakantang

2001

Pacific-Basin Finance Journal

203

127

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This study investigates the effects of controlling shareholders on corporate performance. The empirical results, based on a unique database of Thai firms, do not support the hypothesis that controlling shareholders expropriate corporate assets. In fact, the presence of controlling shareholders is associated with higher performance, when measured by accounting measures such as the ROA and the sales-asset ratio.Since most of the firms do not implement control mechanisms to separate voting and cash flow rights, the controlling shareholders might be self-constrained not to extract private benefits. Otherwise, they would internalize higher costs of expropriation from holding high stakes. The controlling shareholders' involvement in the management, however, has a negative effect on the performance. The negative effect is more pronounced when the controlling shareholder-and-manager's ownership is at the 25-50 percent.The evidence also reveals that family controlled firms display significantly higher performance. Foreign controlled firms as well as firms with more than one controlling shareholder also have higher ROA, relative to firms with no controlling shareholder.JEL Classification: G30, G32

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Management succession and financial performance of family controlled firms

Cited by 275 publications

References 23 publications

Corporate governance and national institutions: A review and emerging research agenda

Corporate governance and national institutions: A review and emerging research agenda

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

Controlling shareholders and corporate value: Evidence from Thailand

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