Weathering the Storm: Family Ownership, Governance, and Performance Through the Financial and Economic Crisis

Abstract

Manuscript Type: Empirical\ud Research Question/Issue: Considering the recent financial and economic crisis as a unique exogenous shock, our study investigates\ud the financial performance of family-controlled firms in “steady-state” conditions as opposed to situations of severe economic\ud distress. In addition, we focus our attention within family firms in order to tease out the leadership (family or non-family\ud CEO) and family ownership (family ownership concentration or dispersion) conditions that allow some governance arrangements\ud to perform better than others during an economic downturn.\ud Research Findings/Insights: Examining the entire population of Italian industrial family and non-family publicly listed\ud companies over the period 2002–2012, we observe a significantly and consistently better performance of family-controlled firms\ud during the financial and economic crisis, a finding that proves to be robust to several analytical specifications, as well as to\ud different performance measures (ROA, ROE). Then, focusing on family firms only, we find that mixed configurations (family\ud CEOs with relatively lower family ownership concentration) produce better performance in the face of an external hazard.\ud Theoretical/Academic Implications: Our study confirms the pivotal assumption of the socioemotional wealth perspective that\ud the advantages of family firms showup exactly when ownership is at stake. Our results also add to the growing literature on the\ud resilience of family firms, showing that they are more able than others to absorb exogenous shocks.\ud Practitioner/Policy Implications: Our findings suggest the importance of crafting governance structures well in advance of a\ud crisis. Our research speaks to policymakers, indicating the importance of family firms for national economies, and the political\ud opportunity to sustain their growth and managerial development

Are All Non‐Family Managers (NFMs) Equal? The Impact of NFM Characteristics and Diversity on Family Firm Performance

“…In this way, our findings also contribute to the recent debate on "mixed gambles" (Gomez-Mejia et al, 2014;Martin, Gomez-Mejia, & Wiseman, 2013), suggesting that predictions regarding the behavior of family managers as riskaverse or risk-prone should be contextualized in a correct alignment of checks and balances between FMs and NFMs. Recent evidence shows indeed the importance of the context to understand SEW influences over family firms' behaviors and financial performance outcomes (Minichilli, Brogi, & Calabrò, 2015). Finally, our study also calls for a tighter integration between family business and traditional management and strategic leadership literatures in explaining how the composition and characteristics of family and non-family actors at multiple levels of ownership, governance, and leadership inside the family firm influence its strategic choices and financial performance.…”

Family ownership and environmental performance: The mediation effect of human resource practices

“…Based on the principal-principal agency theory framework (Young, Peng, Ahlstrom, Bruton, & Jiang, 2008), our study attempts to shed light on the aforementioned research question by exploring how family blockholders affect firm behavior and expose firms to principal-principal problems (Boyd & Solarino, 2016). In principalprincipal conflicts, blockholders' interests and goals do not align with those of minority shareholders or other blockholders (e.g., Minichilli, Brogi, & Calabrò, 2016), increasing the likelihood of the expropriation of nonblockholders. In the context of family firms, goal discrepancy among shareholders is aggravated by the pursuit of goals other than economic wealth by owner families (Aparicio, Basco, Iturralde, & Maseda, 2017).…”

Founding family and auditor choice: Evidence from Taiwan

“…Finally, we also control for various corporate governance characteristics, including board size ( BOARD_SIZE ), board independence ( IND_BOARD ), the presence of an audit committee ( AUDIT_COMMIT ), CEO duality ( DUALITY ), and total external block ownership ( BLOCK_OWN ). It has been suggested that these corporate governance characteristics are associated with the effectiveness of monitoring functions and the financial reporting quality of a firm, and consequently have an impact on the firm's demand for high‐quality auditors (e.g., Beasley & Petroni, ; Cohen, Krishnamoorthy, & Wright, ; Grove, Patelli, Victoravich, & Xu, ; Ho & Kang, ; Klein, ; Minichilli, Brogi, & Calabrò, ).…”