Family-Owned Firms between Agency Conflicts and Stewardship: Corporate Governance Factors Driving Firm Performance

Siddik, Md. Nur Alam; Kabiraj, Sajal

doi:10.3126/jbmr.v1i2.15662

Cited by 2 publications

(3 citation statements)

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“…In this regard, we refer to Fama and Jensen [36] who state that "family members have advantages in monitoring and disciplining related decision agents". The results show that management has a positive and significant influence on ROA similar with the results obtained by Siddik and Allouche et al [76,82] and TAT [89].…”

Section: Results Of Regression Analysissupporting

confidence: 89%

“…Company performance can be measured by financial and non-financial indicators. Regarding the empirical results, in previous family business studies [53,76] for financial performance the most used indicators were return on equity (ROE), return on assets (ROA) and profit margin (PM), which is based on the company's annual earnings. However, the following indicators are also relevant for analyzing how to use assets: debt ratio and turnover total assets ratio (TAT), as indicators that help to interpret the company's evolution [77,78].…”

Section: The Modelmentioning

confidence: 99%

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The Romanian Family Businesses Philosophy for Performance and Sustainability

2019

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Family businesses represent a large segment of private companies and contribute greatly to economic growth. In this context, the objectives of this paper are to identify the characteristics of Romanian family businesses, starting from their involvement and governance mechanisms, and also to investigate if these specific items allow them to act towards creating sustainable businesses. In order to achieve these objectives, we have used qualitative and quantitative research, consisting of two phases: (a) we have analyzed the reports regarding the Romanian family businesses, in order to identify their characteristics; and (b) we have empirically tested if the characteristics are correlated with company financial performance and social responsibility. The results show that Romanian family businesses are aware of the changes that may appear and that they have started to implement internal processes oriented towards sustainability. Also, the main family involvements in business were ownership, governance, management and succession, which have a correlation with the performance of their company.

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Section: Results Of Regression Analysissupporting

confidence: 89%

Section: The Modelmentioning

confidence: 99%

The Romanian Family Businesses Philosophy for Performance and Sustainability

2019

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“…This function facilitates estimation even when there exists a panel-specific autocorrelation structure, as well as a cross-sectional correlation and heteroscedasticity across panels (STATA). In literature, the authors who have met with the same type of dataset are: Siddik and Kabirak (2016) and Filho and Husted (2018).…”

Section: Resultsmentioning

confidence: 99%

Corporate governance and financial fraud occurrence – case study on Romanian companies

Popa (Sabău),

Achim,

Teusdea

2024

JRF

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PurposeThe aim of this study is to approach the way in which corporate governance influences the occurrence of financial fraud, as expressed by the M-Beneish score. In order to get further into the topic, we have first computed a corporate governance score based on the comply-explain statement and then selected a few elements that are part of the corporate governance reporting: equilibrium of board members (EQUIL), independence of board members (INDEP), selection of the board members (NOM), remuneration policy (REM), audit committee (AUDIT) and the proportion of female directors on boards (GenF). They were tested, one by one, using the financial fraud score to see the way in which they interact.Design/methodology/approachThe study is conducted on a sample of 65 companies listed on the Bucharest Stock Exchange (BSE) for the 2016–2022 period. The data were processed using three-stage general least square [general least squares (GLS), with iteration, igls and option] with a common first-order panel-specific autocorrelation correction, so as to explain how a poor adoption of the corporate governance score and its elements has a negative implication for the M-Beneish score, controlling for the auditor opinion, type of auditing company and if the company is privately owned.FindingsThe results support most of our research hypothesis, revealing that a poor adoption of the corporate governance score and its components – AUDIT, EQUIL, INDEP and GenF – negatively influences the M-Beneish score, i.e. a low corporate governance score will lead to an increase in financial fraud. This is an encouraging aspect, for an improved adoption of the corporate governance principles reduces the occurrence of financial fraud.Research limitations/implicationsThis is a study that concerns the relationship between corporate governance and financial fraud for the case study for Romania.Practical implicationsThe study highlights the importance of adopting the corporate governance code applied to the Romanian business environment. By measuring the presence of financial fraud appearance through the M-Beneish score, we have managed to outline the negative relationship between the two components. Thus, it is an important aspect of which companies should take account, so they will have long-term benefits and ensure the continuity of the business.Social implicationsThe policy implications of this project are for policymakers, so that they will understand how a good corporate governance mechanism will enhance high-performing businesses. Different aspects regarding corporate governance were validated and are in the process of being validated. Managers can extract and try to understand and apply the good characteristics of corporate governance for the well-being of their companies. At a broader level, the macroeconomic environment will increase its own well-being while encouraging market players to enhance qualitative corporate governance reporting. There is no doubt that corporate governance has a positive impact on businesses.Originality/valueThe study highlights the importance of adopting the corporate governance code as applied to the Romanian business environment. By measuring the occurrence of financial fraud using the M-Beneish score, we have managed to outline the negative relationship between the two components. Therefore, this is an important aspect that companies should take into account in order to have long-term benefits and ensure the continuity of their business.

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Family-Owned Firms between Agency Conflicts and Stewardship: Corporate Governance Factors Driving Firm Performance

Cited by 2 publications

References 28 publications

The Romanian Family Businesses Philosophy for Performance and Sustainability

The Romanian Family Businesses Philosophy for Performance and Sustainability

Corporate governance and financial fraud occurrence – case study on Romanian companies

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