Exploring the relation between family ownership and incentive stock options: The contingency of family leadership, board monitoring and financial crisis

Catuogno, Simona; Arena, Claudia; Cirillo, Alessandro; Pennacchio, Luca

doi:10.1016/j.jfbs.2017.11.005

Cited by 13 publications

(6 citation statements)

References 76 publications

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“…Furthermore, the positive role of crisis documented in this study is consistent with previous studies showing that the crisis increases the likelihood of the firm adopting CG mechanisms (Catuogno et al ., 2018). However, this finding differs, at least in part, from the findings of Karaibrahimoglu (2010) who discovered that companies choose to cut their spending on CSR activities during the financial crisis.…”

Section: Empirical Findingssupporting

confidence: 92%

“…Based on this premise, there are challenges with successful intergenerational governance and succession, including issues with third-generation leadership and competency in business activity (Ramadani et al, 2020). Furthermore, the positive role of crisis documented in this study is consistent with previous studies showing that the crisis increases the likelihood of the firm adopting CG mechanisms (Catuogno et al, 2018). However, this finding differs, at least in part, from the findings of Karaibrahimoglu (2010) who discovered that companies choose to cut their spending on CSR activities during the financial crisis.…”

Section: Empirical Findings 41 Descriptive Statisticssupporting

confidence: 87%

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Determinants of corporate governance compliance: what matters and what does not?

Tanjung

2023

JBSED

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PurposeThe objective of this study is to assess the level of corporate governance (CG) compliance and identify determinants of high compliance in Indonesian publicly listed corporations including family and nonfamily firms. The country uses a voluntary disclosure approach to enforce its regulations; thus, it is important to identify the factors affecting compliance.Design/methodology/approachEmploying a logistic regression model, this paper analyzes the CG index of high-compliance vs. poor-compliance companies and emphasizes factors that contribute to better governance compliance. The CG index of high-compliant firms is almost twice as high as that of low-compliant firms.FindingsThe study explores factors that contribute to high CG in an emerging market like Indonesian corporations. The study's findings indicate that family-owned businesses predominate in the low-compliance group. High-compliance firms are older and larger with higher financial performance, free float and leverage, as well as a positive influence of the founder's great leadership. The results support theoretical arguments that concentrated ownership and excessive majority shareholder control are key factors in determining the likelihood of good governance practices by firms. Hence, the market and regulators should devise effective strategies to encourage and reward high compliance.Research limitations/implicationsThe findings of the research offer several implications for the academic community and policymakers. Improving CG at the firm level is a viable goal, even though the agenda to reform minority investor protection laws and increase judicial quality is challenging and may take a long time to show significant results. Moreover, this study has some limitations that could be addressed in future research. The study focuses on a single-country setting, Indonesia. There are cultural aspects and governance settings that may be unique in the Indonesian context, which may limit the applicability of the findings to other countries with their own cultural settings and institutional legal framework.Originality/valueThe study investigates the factors that influence high governance compliance in specific CG regulations designed for the emerging Indonesian market. The study also discovers evidence that the crisis period has a favorable impact on the firm's decision to comply with governance provisions.

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Section: Empirical Findingssupporting

confidence: 92%

Section: Empirical Findings 41 Descriptive Statisticssupporting

confidence: 87%

Determinants of corporate governance compliance: what matters and what does not?

Tanjung

2023

JBSED

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“…The results provide interesting insights into the role covered by family members within organizations. In particular, despite the fact that the Italian context is characterized by a high degree of interlinkages between firms' ownership and corporate governance (Catuogno et al 2018;Di Cagno et al 2002;Pellicelli 2016), the data reveals the existence of differences caused by the different roles covered by family members in the organization. Also, despite the dependent variables used within the study regarding financial ratios characterized by different focus, the results reveal similarities and differences.…”

Section: Resultsmentioning

confidence: 85%

The Relationship among Family Business, Corporate Governance, and Firm Performance: An Empirical Assessment in the Tourism Sector

Leopizzi

Pizzi

D'Addario

2021

Administrative Sciences

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Tourism has been the subject of great attention of policy makers. The centrality of the sector derives from multiple factors, including the high number of subjects employed within the supply chain, the contribution to developing nations’ economic growth, and the environmental implications of establishing new productive activities. Under this scenario, family holdings play a central role as the main types of organisations active in the sector. In this sense, an understanding of these companies’ financial performance cannot disregard the understanding of the governance mechanisms that characterize the same given the potential divergence between “family” and “business” objectives. The research aims to encourage the development of new empirical evidence about this business model, providing specific contributions regarding the role of family members in companies’ decision-making mechanisms. For our purposes, an empirical analysis based on the evaluation of 343 Italian hotels was built.

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“…Our results reveal that family involvement in governance positively moderates this relationship, since family directors—through their privileged position on the board—are more likely to pursue both pro‐organizational and pro‐family views in decision‐making (Gomez‐Mejia et al, 2003). This encourages shareholders' views to be taken into consideration, which favors more aligned CEO compensation packages, thereby stimulating SOP voting in that direction in an effort to preserve family wealth (Catuogno et al, 2018; Cheng et al, 2015). Similarly, family firms led by a non‐family CEO tend to experience a reinforcement in SOP effectiveness since these CEOs are less committed to family socioemotional values, which emphasize the use of governance mechanisms such as SOP to align CEO compensation with financial gains in order to preserve family wealth (Miller et al, 2014; Waldkirch, 2020).…”

Section: Conclusion and Discussionmentioning

confidence: 99%

Shareholder activism in listed family firms: Exploring the effectiveness of say‐on‐pay on CEO compensation

Sánchez‐Marín,

Lozano‐Reina,

Baixauli‐Soler

2023

Business Ethics Env & Resp

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The widespread critical evidence surrounding executive compensation of listed corporations has boosted shareholder activism in recent decades. The say‐on‐pay (SOP) mechanism—a vote in which shareholders express their (dis)agreement with executive pay designs—is one of the corporate governance mechanisms that has led to this activism among listed firms. Merging agency and socioemotional wealth (SEW) arguments, this paper analyzes how effective SOP voting results are among listed family firms in terms of CEO compensation efficiency and equity. Using a sample of UK listed firms from 2011 to 2018, our results show that SOP effectiveness is positively influenced by family ownership and is strongly moderated by family involvement in management and in governance as well as by family generation. Our findings stress the strong family effect and the ethical perceptions of family shareholders on SOP voting, showing how family participation in the firm encourages fairer and more aligned CEO compensation packages. SOP institutional and practical implications oriented to preserve shareholder value and family wealth are finally outlined.

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Exploring the relation between family ownership and incentive stock options: The contingency of family leadership, board monitoring and financial crisis

Cited by 13 publications

References 76 publications

Determinants of corporate governance compliance: what matters and what does not?

Determinants of corporate governance compliance: what matters and what does not?

The Relationship among Family Business, Corporate Governance, and Firm Performance: An Empirical Assessment in the Tourism Sector

Shareholder activism in listed family firms: Exploring the effectiveness of say‐on‐pay on CEO compensation

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