The effect of family control and management on performance, capital structure, cash holding, and cash dividends

Portal, Márcio Telles; Basso, Leonardo Fernando Cruz

doi:10.22495/cocv13i1c10p2

Cited by 8 publications

(4 citation statements)

References 39 publications

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“…It is consistent with Setia-Atmaja (2010), Isakov and Weisskopf (2015), Gong (2015) and Huang et al (2012). However, the dividend decision may reflect the risk profile of the family or difficulty in assessing external financing (Portal and Basso, 2015). Anderson and Hamadi (2009) suggest that due to maintain control and reducing the need to dilute control, the family enterprise might decide to keep high level of cash holding and thus low the dividends.…”

Section: Dividend Policysupporting

confidence: 65%

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The financial decisions of family businesses

Motylska-Kuźma

2017

JFBM

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Purpose The purpose of this paper is to examine the status, trends and potential future research areas in the field of financial decision-making process in family firms. Design/methodology/approach The bibliometric indicators and methods are applied in order to describe the publication activity and to analyze the contents of the articles. The material examined are the journals included in the SCOPUS, SAGE and EBSCO database and the peer-reviewed article, which contain in their titles, keywords or abstracts with a combination of phrases “family firms,” “family business” or “family enterprise” with “financial decision” or one of the subcategories: capital structure, investment decision, capital budgeting, working capital management or dividend policy. The study covers the period from 2000 to 2016. Findings Although the interest in family business research is growing rapidly, the area of financial decision making is underestimated. Despite of the fact that the vast majority of the studies into financial decisions in family firms is are focused on the capital structure, they do not give clear answers to the question of how the family businesses behave in this scope and what their true financial logic is. Additionally, the area of the investment decisions and dividend policy is rather not better left uncovered. Research limitations/implications The analyses enable the identification of potential avenues for future research which could be vital to make an advancement in the consolidation of the discipline. Practical implications The analyses ought to have a potential meaning mainly for external institutions (especially financial institutions) in better understanding of the family businesses and their point of view. Originality/value This paper fulfills the need of a comprehensive review of financial decision making process in family firms. It provides a literature review and bibliography for the period between 2000 and 2016 for the use of both academicians and practitioners.

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Section: Dividend Policysupporting

confidence: 65%

“…The advantages and disadvantages of the family firm co-exist (Wei et al, 2011), and the ultimate effect of family control/management on the financial decision making process depends on the extend of family involvement in management, which dictates the cost and net benefits that are dominant in family firms (Portal, 2015).…”

Section: Discussionmentioning

confidence: 99%

The financial decisions of family businesses

Motylska-Kuźma

2017

JFBM

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“…The involvement of family members in boards of director can also influence how family firms shape their capital structure decisions. Moussa and Elgiziry (2019) and Portal and Basso (2015) find that the presence of family members on the board enhances the controlling power of families, allowing them to better influence firm decisions. Similarly, Hansen and Block (2020) conclude that board involvement allows family owners to have more power to pursue their objectives at the cost of minority shareholders.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…Next, we examine how family involvement in the board of directors can affect the capital structure of family firms. According to Comino-Jurado et al (2021), Moussa and Elgiziry (2019), and Portal and Basso (2015), the presence of family members on the board can enhance the controlling power of families, allowing them to better influence firm decisions. Therefore, family firms with board involvement tend to use more debt to increase firm value and avoid losing control to external shareholders.…”

Section: 2mentioning

confidence: 99%

Family ownership and capital structure: evidence from ASEAN countries

Tran

Nguyen

2023

CFRI

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PurposeThis paper examines the capital structure decisions of family firms in Southeast Asian (ASEAN) countries, considering the moderating effects of various firm-level and country-level factors.Design/methodology/approachThe authors apply various panel data models to analyze the data of listed firms in six ASEAN countries over the period of 2007–2017.FindingsThe authors find that family firms tend to use more debt, particularly short-term debt, than non-family firms, which is explained by family owners' concern about the risk of losing control. The authors further document that family firms would use more debt when they have lower ownership concentration, have more family members on the board of directors and are young firms. The authors also find that the impact of family ownership on capital structure is moderated by the level of investors' legal protection of a country.Originality/valueThis study, for the first time, provides comprehensive analyses of the financing decisions of family firms in ASEAN using a unique hand-collected dataset, which highlights that regional culture and market conditions can shape family firms' financing decisions. The authors also manage to mitigate the endogeneity issues that pervade most research on family firms. In addition, this research further explores the heterogeneous impacts of family control on capital structure given different levels of board involvement, firm age, ownership concentration, and most importantly, institutional differences. Such insights provide useful information for prospective investors as well as regulators to make more efficient investment and legislative decisions.

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CEO attributes and foreign shareholdings: evidence from an emerging economy

Chakraborty

Mahakud

2023

JFRA

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Purpose This paper aims to examine the impact of chief executive officer (CEO) attributes on foreign shareholdings from the perspective of an emerging economy. Design/methodology/approach This study examined Bombay Stock Exchange listed firms from the Indian stock market and applied a balanced panel data approach with fixed effect estimation technique during the period 2010–2019. Findings The study shows that CEOs’ financial education and a higher level of education positively affect foreign shareholdings. The age and experience of CEO have a positive and significant impact on foreign shareholdings. Firms with male CEOs are preferred more by foreign investors. The effect of CEO busyness and CEO duality is negative on foreign shareholdings. Foreign investors prefer to invest in firms with foreign nationality CEOs. Furthermore, the robustness test reveals that the influence of CEO attributes on foreign shareholdings is stronger for new, small and stand-alone firms than for old, large and group-affiliated firms. Practical implications The study will be beneficial for a diverse audience ranging from firms’ board of directors, regulators and policymakers who are entrusted with the CEO recruitment process. Additionally, firms seeking external financing should disclose CEO information adequately and improve the reporting quality to attract foreign investors, as they consider CEO characteristics as a valuable signal before making investment decisions. Originality/value In light of the current legislative reforms, this study can be recognized as one of the early studies that explore the relationship between CEO attributes and foreign shareholdings in the context of an emerging economy.

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The effect of family control and management on performance, capital structure, cash holding, and cash dividends

Cited by 8 publications

References 39 publications

The financial decisions of family businesses

The financial decisions of family businesses

Family ownership and capital structure: evidence from ASEAN countries

CEO attributes and foreign shareholdings: evidence from an emerging economy

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