Family Firms and Compliance: Reconciling the Conflicting Predictions Within the Socioemotional Wealth Perspective

Castro, Luiz Ricardo Kabbach de; Aguilera, Ruth V.; Crespí–Cladera, Rafel

doi:10.1177/0894486516685239

Cited by 54 publications

(31 citation statements)

References 79 publications

(94 reference statements)

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“…Family owners differ from other ownership types because of the unique overlap among ownership, management, and the family group (Berrone, Cruz, Gomez‐Mejia, & Larraza‐Kintana, 2010) shaping socioemotional wealth (SEW; Calabrò, Torchia, Pukall, & Mussolino, 2013), referred to as “nonfinancial characteristics of the firm that bear on the family's affective endowments” (Kabbach de Castro, Aguilera, & Crespí‐Cladera, 2017, p. 2). Because of their early socialization into the business, family members possess a rich firm‐specific knowledge that can be used as a monitoring instrument and a resource for the firm (Bammens et al, 2011; Hope, Langli, & Thomas, 2012).…”

Section: Current State Of the Fieldmentioning

confidence: 99%

Bringing owners back on board: A review of the role of ownership type in board governance

Federo

Ponomareva

Aguilera

et al. 2020

Corporate Governance

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Research Question/Issue In this comprehensive literature review, we synthesize and analyze the current state of academic research regarding the relatively understudied relationship between the type of owners and board governance. Research Findings/Insights Our review of the existing literature at the intersection of ownership and board governance research discusses how six distinct ownership types—pertaining to family, lone founder, corporation, institutional investor, state, and venture capitalist—shape board governance, defined as board structure, composition, and processes. We also uncover the influence of ownership type on board functional performance (i.e., monitoring, resource provision, and strategic involvement) and the implications of these owner–board relationships for a variety of firm outcomes (related to performance and compliance). Theoretical/Academic Implications We present identifiable patterns in board governance and functional performance associated with each ownership type and their respective implications for a wide range of firm outcomes. We then propose seven core emerging themes that deserve further scholarly attention. Practitioner/Policy Implications Our analysis cautions against the application of the “one‐size‐fits‐all” best‐practices approach in board governance advocated by policy makers, scholars, and corporate governance activists and underscores the need to consider the contingent effects of different owners' behaviors and interests in shaping and assessing board governance.

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Section: Current State Of the Fieldmentioning

confidence: 99%

Bringing owners back on board: A review of the role of ownership type in board governance

Federo

Ponomareva

Aguilera

et al. 2020

Corporate Governance

Self Cite

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“…GCF and its variations (Brown et al, 2009a;Fazzari et al, 1988) are used widely in the literature as a proxy for the magnitude of private benefits (Adams et al, 2007;Chen et al, 2011;Kabbach de Castro et al, 2017;Lehn et al, 1989;Linck et al, 2008;Raheja, 2005), meaning that the higher the cash-flow, the higher the potential for the blockholder to expropriate or misuse these funds. High GCF increases the potential for opportunistic behavior by blockholders in which blockholder utility maximization prevails over firm value maximization (Bertrand et al, 2003;Gomez-Mejia et al, 2001;Kabbach de Castro et al, 2017). We believe that our measure of blockholder appropriation enhances the existing literature because we capture how GCF translates into investment in fixed assets and firm long term growth, as opposed to being used for other purposes enhancing blockholders' private wealth.…”

Section: Independent Variablesmentioning

confidence: 99%

Lost in translation? Corporate governance, independent boards and blockholder appropriation

Grosman

Aguilera

Wright

2019

Journal of World Business

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Emerging economies are oftentimes characterized by state capitalism, concentrated ownership and constrained resources, where firms face underinvestment due to resource misappropriation. The adoption of Anglo-American corporate governance practices may result in sub-optimal outcomes. We draw on the multiple agency perspective and research on cross-national governance to examine how independent directors, as agents with multiple roles, might mitigate blockholder appropriation. Using unique panel data from Russian publicly traded firms where the government and the business elite are predominant blockholders, we find that independent directors in private firms are less effective in mitigating blockholder appropriation than in state-owned enterprises. We further investigate board independence effects driven by the exposure to three international governance boundary conditions, namely Russian Multinational Enterprises, foreign listings of Russian firms, and foreign independent directors on Russian boards. Our study focuses on the agents that might assuage principal-principal conflicts, explores when ineffective governance can be minimized, and contributes to research on how governance practices developed in advanced economies get translated in emerging market economies.

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“…In this endeavour, we not only address the structural aspect of board composition on paper, but also highlight the actual involvement of directors in practice. As such, our study augments prior works examining the effect of family ownership on corporate governance (e.g., Cannella, Jones and Withers, 2015;Kabbach-de-Castro, Aguilera and Crespi-Cladera, 2017;Mazzelli, Kotlar and De Massis, 2018;Miller, Le Breton-Miller and Lester, 2013) by going beyond the fundamental 'whether or not' question on the likelihood of compliance to tackle more interesting issues of 'when', 'how' and 'why' on speed, degree and underlying drivers of (non)compliance.…”

Section: Introductionmentioning

confidence: 86%

Delayed and Decoupled: Family Firm Compliance with Board Independence Requirements

Shaw

Cordeiro

2021

British J of Management

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We investigate family firms' speed and degree of compliance with board independence requirements and how willingness and ability affect family firms' compliance patterns. Using a longitudinal sample of Indian publicly traded firms during a transitional period of corporate governance reforms, we find that family firms are slower to comply with board independence requirements than non-family firms. Family firms' compliance speed is even slower as agency costs increase. We also document that family firms are prone to symbolically comply with board independence requirements, as independent directors in family firms are less engaged than their counterparts in non-family firms. Family firms' symbolic compliance is even more salient when family firms possess larger agency problems and greater resource constraints. Our results also point to a complementary relationship between family firms' willingness and ability to comply, as family firms with greater agency costs and larger resource constraints are among the slowest to comply and are also most likely to comply superficially. Overall, we conclude that family firms' internal logic, agency costs and resource constraints jointly affect their compliance patterns. Indian corporate governance reformOur study is positioned in India, an important emerging economy experiencing significant

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Family Firms and Compliance: Reconciling the Conflicting Predictions Within the Socioemotional Wealth Perspective

Cited by 54 publications

References 79 publications

Bringing owners back on board: A review of the role of ownership type in board governance

Bringing owners back on board: A review of the role of ownership type in board governance

Lost in translation? Corporate governance, independent boards and blockholder appropriation

Delayed and Decoupled: Family Firm Compliance with Board Independence Requirements

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