Search

Purpose: The authors study the effects of altruism and intention for succession on family firm's reputation risk-taking behaviors in Chinese publicly listed companies. Design/methodology/approach: The authors use earnings management as a proxy for reputation risk in family firms, and hand-collected relationship between family members to measure the closeness of incumbent family members and their potential successors as a proxy for the altruistic degree. Findings: Results show that, in developing countries like China, familial altruism in family firms with succession plans, which does not reduce the practice of earnings management, should be considered by practitioners while detecting it. Originality/value: The hand collected data are very unique; the authors have focused on the relationship between incumbents and successors and the authors define their closeness by using genes shared between them. [ABSTRACT FROM AUTHOR]

How does the socioemotional wealth (SEW) of a family firm affect its deal valuation in acquisition? Using a sample of 515 completed transactions of S&P 500 firms over the period 2003–2016, we examine a number of contexts and find that SEW creates differential valuations of targets by family firms vis-à-vis non-family firms. Particularly from an internationalization perspective, acquisitions may be an ideal option for family firms because foreign acquisitions may be loosely coupled from the core firm. Post-hoc analyses on the heterogeneity in family governance reveal that founder and descendant board chairs may have different perceptions of SEW. [ABSTRACT FROM AUTHOR]

This paper investigates the layoff behavior, a typical people dimension of corporate social performance (CSP), of family firms from a place-based perspective. We theorize that a place-based culture within family firms ensures that all organizational members share a deep sense of connection with the place of operations which makes them inherently care about their impact on society. Using data on layoffs of 2000 largest US firms between 1994 and 2007, we find that family firms do indeed exhibit a lower tendency to lay off employees in comparison to non-family firms; this relationship is particularly strong in 'places' with low population where the negative social externalities related to layoffs tend to be higher. Further post hoc analyses indicate that family firms have a strong place-based culture which can provide resource-based competitive advantages. [ABSTRACT FROM AUTHOR]

The impact of family involvement on firm behaviour is an issue of global interest, yet paradoxically few studies examine the behaviour of family firms in the unique socio-political environment of China. We investigate the cross-institutional generalizability of the behavioural agency model, emphasizing the non-economic goals of controlling families as a driver of unique yet predictable behaviours in Chinese family firms and examine the relationship between family involvement and the R&D expenses reported by these firms. We propose that in a context of weak property rights protection such as China’s, the opportunity for family owners to attain transgenerational control is subject to the additional risk of state predation. We consequently expect economic goals to prevail over family-centred non-economic goals in Chinese family firms and hypothesize that their reported R&D expenses increase with family involvement due to severe Type II agency problems. Moreover, we examine the effect of positive and negative performance feedback on this relationship. Longitudinal data from non-state-owned listed companies in China provide overall support for these contentions. We discuss the theoretical and practical implications of these findings. [ABSTRACT FROM AUTHOR]

This paper sheds light on the incongruent findings concerning the relationship between family involvement and firms’ corporate social responsibility (CSR). While prior studies have mainly taken the perspective of families’ socioemotional wealth preservation, we approach this relationship from the perspective of behavioral agency theory, highlighting the important role played by CEOs’ family memberships. Specifically, we posit that family firms are more likely to invest in CSR when their CEOs are members of the controlling families. Furthermore, we examine how family firms can employ long-term incentives to encourage non-family CEOs to act in the interests of the controlling families to preserve SEW and thus enhancing family firms’ CSR performance. We tested our hypotheses using hand-collected data of family firms included in the S&P 500 index, in the period of 2003-2010. The empirical findings support our hypotheses that (a) family firms with family members as the CEOs have better CSR performance and (b) family firms tend to provide a high level of long-term incentives to non-family than family CEOs. In addition, long-term incentives strongly motivate CEOs to improve firms’ CSR performance, regardless of their family memberships. [ABSTRACT FROM AUTHOR]

This commentary extends Hillier, Martínez, Patel, Pindado, and Requejo (2018) by placing their insights within a wider context of the debate between the agency theory and stewardship theory. To reconcile the conflicts between the two theories, we propose a family-value perspective to incorporate the intrinsic heterogeneity of family firms. We highlight how different family values may lead to different strategic behavior and how various theoretical perspectives may be best used to describe the behavior of family firms with certain specific values. [ABSTRACT FROM AUTHOR]

This study examines the relationship between family control and young entrepreneurial firm's bribing behavior around the globe. Relying on over 2,000 young firms from the World Bank Environment Survey, we find that family control helps to reduce a firm's bribery behavior, but further investigation shows that this effect only exists in countries with weaker macro-governance environment. In countries with more established and transparent governance mechanism, family control does not seem to make any difference. We interpret our findings as the business family's preservation of socioemotional wealth. [ABSTRACT FROM AUTHOR]

This study reviews family business in mainland China from 1872 to 1949 and provides evidence of its early development and its origins in 1872 when the first modern manufacturing firm was founded. We analyse the social, economic, and political environment in which family firms in mainland China were embedded to improve our understanding of how this unique organisational form was established and developed. Our analyses cover the late Qing Dynasty and the period from 1912 to 1949 during which the Republic of China (ROC) ruled mainland China. Implications for current family business theory and practice are discussed. [ABSTRACT FROM AUTHOR]

This article aims to understand if a change in accounting standards offers new avenues for helping entrepreneurial firms, especially those family-controlled ones, to obtain debt financing from foreign banks. We find that amid the global wave of adopting International Accounting Standards ( IAS), family-controlled firms tend not to voluntarily switch from local generally accepted accounting principles to IAS. After self-selection issues are taken into account, furthermore, entrepreneurial firms adopting IAS experience less difficulty accessing loans from international banks. However, IAS adoption differentially influences private firms, family owned versus nonfamily controlled, in terms of their access to debt capital. [ABSTRACT FROM AUTHOR]

This study adds to the theory of family business management by exploring the effects of family ownership on the corporate misconduct of small firms in the United States. The empirical findings indicate that small family-owned firms are less likely to commit misconduct than small non-family-owned firms. We interpret this finding as family firms aiming to achieve the trans-generational succession of moral capital. Further investigation shows a nonlinear family-ownership-misconduct relationship. A negative relationship between them only appears in mature firms. We further show that for relatively mature firms, only family firms with older owners are less likely to commit corporate misconduct. [ABSTRACT FROM AUTHOR]