scholarly journals Zero-Leverage Policy: Is the Family Nature of Private Firms Relevant?

2019 ◽  
Vol 11 (7) ◽  
pp. 28
Author(s):  
Oscar Domenichelli
Keyword(s):  
Corporate Governance ◽  
Risk Aversion ◽  
Family Business ◽  
Family Firms ◽  
Private Firm ◽  
Agency Conflicts ◽  
Propensity Analysis ◽  
The Family ◽  
Debt Policy

This work investigates whether being a family business influences a private firm’s propensity to be leveraged and the underlying reasons behind such propensity. Analysis focuses on a sample of Italian private family and non-family firms for the period from 2008-2017. Socioemotional and corporate governance considerations cause agency conflicts to be negligible in Italian private family firms, and thus the use of debt is unrelated to these conflicts. Nevertheless, these enterprises are more likely to eschew a zero-debt policy, as opposed to their non-family counterparts. This is due to the socioemotional orientation of Italian private family firms, that is the desire of their family owners to keep long-term control over the business, through the use of leverage, which prevails over risk aversion.

scholarly journals Principal-Principal Conflicts and Socioemotional Wealth in Family Firms

2017 ◽  
Vol 9 (10) ◽  
pp. 128 ◽  
Author(s):  
Jason See Toh Seong Kuan ◽  
Chin Fei Goh ◽  
Owee Kowang Tan ◽  
Norliza Mohd Salleh
Keyword(s):  
Corporate Governance ◽  
Family Firms ◽  
Family Firm ◽  
The Public ◽  
The Family ◽  
Different Types ◽  
Governance Practice ◽  
Corporate Governance Practice ◽  
The Relationship

Corporate governance is the concern of all the parties throughout the world regarding their viability in order to ensure the sustainability of the firm. As the family firms are listed in the public exchange, there are different kind of the investors in the corporation produce the resolution that are opposing to each other. Moreover, the large capital that is injected by the institutional investor complicates the role played in the corporation that shapes the culture and philanthropy. The phenomenon leads to the complex relationship in one corporation due to the different types of interest. Board composition and board independence are stretched by numerous scholars regarding the core importance in the corporation. Executive compensation is another area of corporate governance that is widely discussed by the scholars regarding the relationship with the long-term firm performance. Therefore, this review paper will focus on the application of the Principal-principal Conflicts theory and Socio-Emotional Wealth theory to narrate the whole scenario of the governance practice in the family firm. Throughout the paper, current rigorous practice of the family firms will be deeply investigated to cover the deep insights of the current phenomenon. The meticulous review of this paper is able to synthesize the significance of these theories towards the general governance setting in the family firms. Eventually, the working paradigm of the family firm can be clearly justified with the rationale that is justified. At the end of the review, the two main theories are concluded to be equally essential to illustrate the corporate governance practice in family firms across the globe.

scholarly journals Entrepreneurial strategies and corporate governance: Experiences from the Italian wine industry

2012 ◽  
Vol 8 (2) ◽  
pp. 44-60
Author(s):  
Di Toma Di Toma ◽  
Arianna Lazzini ◽  
Stefano Montanari
Keyword(s):  
Corporate Governance ◽  
Competitive Advantage ◽  
Family Business ◽  
Family Firms ◽  
Wine Industry ◽  
Competitive Advantages ◽  
Family Social Capital ◽  
Italian Wine ◽  
The Family ◽  
Entrepreneurial Strategies

A distinctive resource typical of family firms, critical in guarantee to family firms long lasting position of competitive advantage is familiness. In previous studies familiness has been defined to characterize the interactions between each family member, the whole family and the business. These interactions leads to systematic synergies with the potential to create competitive advantages or disadvantages for the firm. Family history and local roots can ensure the family business a competitive advantage long lasting and evolutive. Our analysis is focused on the wine industry in Italy and analyzes the case of Barone Ricasoli Spa an estate owned by the family Ricasoli since 1141. We find that the family social capital supports the processes of resources acquisition and promotes the business renewal.

Risk aversion in the family business: the dark side of caution

2014 ◽  
Vol 35 (5) ◽  
pp. 38-42 ◽  
Author(s):  
Martin R.W. Hiebl
Keyword(s):  
Risk Aversion ◽  
Family Business ◽  
Risk Taking ◽  
Family Firms ◽  
Family Businesses ◽  
Business Leaders ◽  
Dark Side ◽  
Content Type ◽  
The Family ◽  
Practical Implications

Purpose – This paper aims to shed light on the potential downsides of risk aversion in family firms. Moreover, it seeks to provide measures on how to balance risk taking and risk aversion in family businesses. Design/methodology/approach – The article first presents four “dark sides” of risk aversion in family businesses and then describes three groups of measures to balance risk aversion and risk taking. Both the dark sides as well as the measures to balance risk aversion and risk taking are derived from recent scientific research. Findings – Family businesses may decrease risk aversion and foster risk taking and innovativeness by creating transparency on their risk profiles and including outside knowledge in the form of non-family managers, directors or shareholders. Moreover, properly educating and integrating younger family generations might also alleviate an overly high focus on short-term risk aversion. Practical implications – Family business leaders might find the approach and findings presented in this paper helpful for securing the longer-term survivability of their firms and for improving innovativeness. Originality/value – This article is among the first to deal with the dark sides of risk aversion in family businesses, which might endanger their longer-term survivability.

scholarly journals GOVERNABILIDADE NA FAMÍLIA EMPRESÁRIA / GOVERNABILITY IN THE FAMILY BUSINESSES

2020 ◽  
Vol 6 (1) ◽  
Author(s):  
Jorge Rodrigues
Keyword(s):  
Family Business ◽  
Family Firms ◽  
Research Strategy ◽  
Integrative Model ◽  
Exploratory Research ◽  
Theory Of Practice ◽  
The Family ◽  
Structured Knowledge ◽  
Business Family

O artigo pretende estabelecer o estado da arte da governabilidade na família empresária. Ao rever a literatura pertinente sobre o campo família empresária contribui-se para a construção de conhecimento organizado e estruturado, para compreender melhor os conceitos subjacentes. Prosseguiu-se uma estratégia de investigação exploratória a qual se socorreu da “teoria da prática” de Bourdieu, para que surja uma visão inovadora do que se passa no campo em análise. Este é um tema complexo e multifacetado que pretende equilibrar os poderes soberano, executivo e de fiscalização, entre a família empresária e o negócio de família. Aquele equilíbrio depende dos estádios de desenvolvimento da família e envolve as estruturas, os processos e políticas que lhe dão forma. Como principais contributos aponta-se para um conjunto de questões centradas nos relacionamentos dos vários membros da família empresária e o modo como esta está comprometida e envolvida no sucesso do negócio a longo prazo. Estas questões destinam-se a ser incluídas num modelo integrador de governabilidade, suficientemente genérico e abrangente para que possa ser aplicado a qualquer tipo de família empresária. This article aims to establish the state of the art of governability in the family business through a literature review. Carrying out an exploratory research strategy of the field of family firms and family business, based on Bourdieu's "theory of practice", it enabled us to better understand the conceptualizations of family business, its underlying concepts and or assumptions, and hence contribute to the construction of organized and structured knowledge in this field. This is a complex and multifaceted theme that aims to balance the sovereign, executive and supervisory powers between the family business and with your own business. Some of our main contributions are: that balance depends on the stages of family development and it involves the structures, processes and policies that shape it, the effect of the relationships of the several members of the family business, and its commitment and involvement in the success of the business in the long-term success. These issues are intended to be included in an integrative model of governability, sufficiently generic and comprehensive so that it can be applied to any type of business family. JEL: D21, D23, G30, L14, L20 <p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/edu_01/0720/a.php" alt="Hit counter" /></p>

scholarly journals Efficacy of corporate social responsibility in corporate governance structures of family owned business groups in India

2018 ◽  
Vol 2 (1) ◽  
pp. 52-68 ◽  
Author(s):  
Raveena Naz
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Family Business ◽  
Family Firms ◽  
Business Groups ◽  
Business Group ◽  
Governance Structures ◽  
The Family ◽  
Corporate Social

The concept of ‘Corporate Social Responsibility’ (CSR) has often relied on firms thinking beyond their economic interest despite the larger debate of shareholder versus stakeholder interest. India gave legal recognition to CSR in the Companies Act, 2013. CSR in India is believed to be different for two reasons: the dominance of family business and the history of practice of social responsibility as a form of philanthropy (mainly among the family business). This paper problematises the actual structure of business houses in India and the role of CSR in a context where the law identifies each company as a separate business entity while the economics of institutions emphasizes the ‘business group’ consisting of a plethora of firms as the institutional organization of business where capital owned or controlled by the family group is spread across the firms through the interlocked holding structures. Within this framework, the largest family firms, which are part of family owned business groups, top the CSR expenditure list. The governance structure of family firms allows family owned business group to show mandatory compliance of CSR even when they actually spend much less than what is prescribed by law. This aspect of the family firms is not addressed by the CSR legislation in particular or corporate governance legislation in general in India. The paper illustrates this with an empirical study of one of the largest family owned business group in India Reliance Industries Limited (RIL), which is well acclaimed for its CSR activities. The paper demonstrates how the business group through these series of shareholding network reduces its legally mandated CSR liability. The paper thus indicates the inadequacy of CSR legislation in India because the unit of compliance is an individual firm and it assumes that each firm is independent and only connected to each other through market dealings. The law does not recognize the inter-connections of firms (through common ownership and control) in corporate governance structures of family owned business group and hence is inadequate in its design to effect the threshold level of CSR expenditure. This is the central argument of the paper.

The succession dilemma in family firms: case study of a French company

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Olivier Meier ◽  
Anne-Sophie Thelisson
Keyword(s):  
Family Business ◽  
Family Firms ◽  
External Financing ◽  
Employment Policy ◽  
Content Type ◽  
The Family ◽  
French Family ◽  
Policy Risk ◽  
Debt Policy

Purpose The purpose of this paper is to highlight the major difficulties and challenges encountered during the crucial process of family succession. In this study, the authors list and analyze issues encountered by managers or by the CEO of a family business. Design/methodology/approach Using a single longitudinal real-time case study conducted over a period of 10 years in a French family business, this study identifies the challenges encountered during family succession. The authors were allowed to follow, over a long period, the planning of the CEO’s succession. Findings The authors identified six critical points in the succession process: planning succession development; favoring creation of financial value for the shareholders; investment policy, risk taking and time horizon of investments (growth); family employment policy (family private benefit); opening of capital and debt policy (external financing); and financing of capital reduction policy (external financing). Originality/value The paper highlights the difficulties, issues and questions encountered by an SME manager or by the CEO of a family business. The analysis gives insights into the deep nature of the family structure, by involving the notions of culture and organizations serving the performance of family businesses.

scholarly journals TAX AGRESSIVENESS IN FAMILY FIRMS: CAN CORPORATE GOVERNANCE MITIGATE IT?

2021 ◽  
Vol 3 (1) ◽  
pp. 1-18
Author(s):  
Arie Pratama
Keyword(s):  
Corporate Governance ◽  
Family Business ◽  
Audit Committee ◽  
Family Firms ◽  
Tax Avoidance ◽  
Financial Statements ◽  
Governance Structure ◽  
Board Of Director ◽  
Audit Firms ◽  
The Family

 Every taxpayers objectives is to minimize the tax paid to government. Few business tried to avoid tax more agressively than the others. This research will tried to investigate whether the family firms are more tax agressive compare to non family firms. Tax agressiveness might be reduced if there is a working governance structure. This research will also investigate whether the governance structure (i.e size of board of director, proportion of independent director, external audit firms, and audit committee) would significantly reduced the tax agressiveness. To control the results, researcher used size, profitability and leverage. This research was quantitative explanatory research. Researcher will analyzed 15 out of 57 family own-business in Indonesia, and make a comparison with non family firms. Researcher examined the financial statements and annual report from year 2011 – 2015. The research will used multiple regression analysis as a data analysis tools. This research will produce tax agressiveness analysis of family firms, non family firms, and combination of both firms. The research showed that, contrast to the non family firms, family firms had agressive tax avoidance scheme. The research also showed that corporate governance in family company in fact, increasing the agressiveness o tax avoidance, while non family firms corporate governance reduced the agressiveness of tax avoidance. Overall this research showed that family business need to improve the governance structure to control its agressive tax avoidance.   Keywords: Corporate Governance, Family Business, Ownership, Tax Avoidance.

The Family Firm's Exclusion from Business School Research: Explaining the Void; Addressing the Opportunity

1997 ◽  
Vol 21 (3) ◽  
pp. 55-71 ◽  
Author(s):  
Reginald A. Litz
Keyword(s):  
Family Business ◽  
Business School ◽  
Family Firms ◽  
Interaction Patterns ◽  
Business Research ◽  
Organizational Research ◽  
The Family ◽  
School Research

Why does the vast majority of business school research either ignore, or at best, gloss over the role of family in owning or managing business enterprises? This paper addresses this question and contemplates how the gap might be remedied. It begins by reviewing recent definitional work on the family firm in order to chart the parameters of the family business construct. It then proceeds to describe the nature of, and interaction patterns that have evolved between family firms, privately held corporations, faculties of business, and business school researchers seeking job security offered by tenure. The paper concludes by offering recommendations for addressing the family business research lacuna. The first recommendation focuses on rethinking the grounding assumptions that have undergirded much traditional organizational research. The second suggestion deals with methodological issues and recommends the patient nurture of long-term, mutually beneficial linkages with family firms that might facilitate in-depth longitudinal inquiry.

Multiple Roles in Serving Families in Business

1998 ◽  
Vol 11 (3) ◽  
pp. 261-266 ◽  
Author(s):  
Marta Vago
Keyword(s):  
Corporate Governance ◽  
Best Practices ◽  
Family Business ◽  
Family Firms ◽  
Codes Of Conduct ◽  
Multiple Roles ◽  
Professional Standards ◽  
Business Professionals ◽  
Family Enterprise ◽  
The Family

When family business professionals serve family firms in more than one capacity, they begin to mirror the problems that cause conflict in business families. Fulfilling multiple professional roles started from necessity and became a tradition. The practice of “dual relationship” has gone unchallenged, even though it holds significant potential risk to the family enterprise. “Best practices” from corporate governance, together with established codes of conduct, provide guidelines for protecting both the quality and the integrity of professional input on which family firms rely. Better educated consumers and accountability to peers mean higher professional standards for meeting the needs of family enterprise.

Making gender visible in family business: past and present

2012 ◽  
Vol 13 (1) ◽  
Author(s):  
Paloma Fernández Pérez ◽  
Eleanor Hamilton
Keyword(s):  
Family Business ◽  
Family Firms ◽  
Business Leadership ◽  
Legal Rules ◽  
Developed Economies ◽  
The Family ◽  
Interdisciplinary Synthesis ◽  
Complex Forms ◽  
Rules Of The Game

This  study  contributes  to  developing  our understanding of gender and family business. It draws on studies from the business history and management literatures and provides an interdisciplinary synthesis. It illuminates the role of women and their participation in the entrepreneurial practices of the family and the business. Leadership is introduced as a concept to examine the roles of women and men in family firms, arguing that concepts used  by  historians or economists like ownership and management have served to make women ‘invisible’, at least in western developed economies in which owners and managers have been historically due to legal rules  of  the  game  men,  and  minoritarily women. Finally, it explores gender relations and  the  notion  that  leadership  in  family business  may  take  complex  forms  crafte within constantly changing relationships.

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