Family Firms and the Market Reaction to Dividend News

This paper provides an analysis of the market reaction to dividend change announcements for publicly-traded, family-controlled firms. Family firms have a significantly lower proportion of independent directors than non-family firms, which is consistent with the idea that family members dominate the board of directors and that family shareholders are common in publicly-traded firms. The author analyzed 390 dividend change announcements in Portugal over the period from 1991 to 2010 using a panel data approach. The results show no evidence of a significant market reaction to dividend change announcements, providing no evidence in support of the dividend-signaling hypothesis in the context of family firms. This conclusion agrees with previous studies in which there was no distinction between family and non-family firms. Empirical results show that family firms engage in lower payouts than their non-family counterparts, giving some supports to the expropriation hypothesis. This finding may indicate that families expropriate the wealth of shareholders through lower dividends. This result is also consistent with the clientele theory of dividends.

Family firm research——A review

This article reviews family firm studies in the finance and accounting literature,primarily those conducted using data from the United States and China. Family owners have unique features such as concentrated ownership, long investment horizon, and reputation concerns. Given the distinguishing features of family ownership and control, family firms face unique agency conflicts. We discuss the agency problems in family firms and review the findings of recent family firm studies. We call for more research to understand the unique family effects and encourage more research on Chinese family firms.Part I of the article discusses the fundaments of family firms: the prevalence of and the agency conflicts within family firms. Part II summarizes the findings of recent U.S. family firm studies. It reviews the evidence on the family firm premium(how, which, and when family firms are associated with a valuation premium), the manifestation of the agency conflict between majority and minority shareholders in family firms, earnings quality and corporate disclosure, and the determinants of family ownership and control. Part III discusses the prevalence and characteristics of Chinese family firms and reviews the findings of related studies. The article concludes with some suggestions for future research.

Effect of family control on corporate dividend policy of firms in Pakistan

This study examines the impact of family control on the dividend policy of firms in Pakistan,covering the period from 2009 to 2016.It also investigates whether family control moderates the impact of firm-specific factors on the dividend policy.The GMM model for panel data estimation is used.The mean difference univariate analysis shows that family firms differ from nonfamily firms based on financial characteristics.The multivariate analysis shows that family firms pay lower dividends than nonfamily firms.Besides,firm size inversely affects the dividend policy,whereas tangibility positively affects it.Moreover,family control does not moderate the impact of all firm-specific factors on the dividend policy.Overall,family control,size,and tangibility are found to be the main determinants of the dividend policy in Pakistan.

Reputation,Accounting Information and Debt Contracts in Chinese Family Firms

This paper provides evidence to show that in the presence of imperfect formal institutions there is both a substitutional and a complementary relationship between accounting information and reputation, an informal institution. Empirical results using a sample of family firms listed in the Chinese A-share stock market from 2004 to 2007 show that in China, where the legal environment is far from perfect, the complementary relationship between reputation and accounting information is more pronounced than is the substitutional relationship. Thus, the aggregate effect is that a better reputation improves the usefulness of accounting information in debt contracts. Besides the aggregate effect, this paper also provides evidence of the substitutional and complementary relationships between reputation and accounting separately.

Women＇s Role in Family Business： Evolution and Evidences from a European Case Study

When we look at the possibility of women occupying top management positions, gender stereotypes are still quite strong. Especially in the past, women＇s professional capabilities and competencies were mostly ignored, both in family firms, and in non-family business. Many wives and daughters, and women in general, had played several roles in firms, but often they were invisible, with no consideration and no monetary gain. Women commonly were not respected and they had no chance to show their capabilities （Dumas, 1998）. Even though women CEOs and founders are an emerging phenomenon, nowadays, still many obstacles, stereotypes and mistrust are preventing women from reaching important positions also in family owned business. In today＇s world of family ambition and increasing gender neutrality, women＇s roles encompass higher achievement in organizational hierarchies. Particularly in the last decades, great advancement in the involvement of women in entrepreneurial and managerial roles, especially in family owned businesses, has been achieved, and the situation is changing fast. More and more, wives and daughters are rising to the leadership of family-firms - even in some of the most male-dominated industries （Nelton, 1999）. According to some authors, today women have gone from ＂invisible to invincible＂ （Nelton, 1999）. This paper pursues two main aims： （1） to show the evolution of the women＇s role in family business and to better understand the obstacles/drivers and possible solutions; and （2） to understand the impact of women on family firms considering several aspects such as their leadership styles, and impact on firm＇s strategy, organization, managerialization and performance. In order to summarize the main obstacles and positive aspects concerning the women＇s involvement in family business, we have applied the framework proposed by Martinez Jimenez （2009）. This framework has been used because it helps to better understand which are the obstacles and drivers that impact on the women＇s involvement in family business. The research method is based on the longitudinal analysis of a case study concerning a medium sized family firm operating in the service sector in Europe. The analysis of the case study has confirmed most of the obstacles/weakness and positive aspects/strengths highlighted by the literature. In the period of analysis, an evolution of the role of women among family generations had emerged, as well a less relevant role of obstacles with respect to strengths can be identified.

Family involvement, family member composition and firm innovation

Based on the data of Chinese listed family firms from 2008 to 2016,we investigate the impact of family involvement on firm innovation and the moderating effect of family member composition.The results show that increased family involvement significantly reduces R&D investment intensity and the number of patent applications.With the increased richness of the kinship of family members involved in management,the negative impact of family involvement on patent applications is weakened,but family member composition does not have a significant moderating effect on the relationship between family involvement and R&D investment intensity.Further analysis shows that the number of invention patent applications decreases as the degree of family involvement increases,but family involvement has no significant effect on utility model patent and design patent applications.Family member composition has a significant moderating effect on the relationship between family involvement and invention patent applications.The results have value as a reference for exploring how family involvement affects firm innovation and can also help the actual controller to take effective measures to optimize family member composition and improve the innovation performance of family firms.

The Lack of Afterlife and Its Effects on Chinese Economic Behavior

It is widely recognized that each culture has a specific effect on the economic development. Based on Chinese culture which can be characterized as lack of afterlife, the pattern of Chinese economic development has distinctive features relative to the economy of the Western world, even to that of Japan and Korea. This paper argues that culture influences economic development through two paths： One is that some cultural factors, as certain institutions, have effects on cost, especially transaction costs. Another point is that culture forms people＇s preferences and influences people＇s choices. With the influences of Chinese culture, Chinese have a weak sense for legal obedience and strong inclination for ＂free riding＂, this would increase social transaction costs. The family centered tradition of Chinese society results in Chinese features such as being good at individual struggles but poor at cooperation, the alienation between civil society and government, a strong sense for competition and a weak sense for legal obedience, seeing material wealth as important and neglecting scientific innovation. Traditional Chinese culture also has effects on the developmental pattern of Chinese enterprises

Non-family chair and corporate performance

Using a sample of Chinese family firms listed from 1999 to 2014, we investigate the relationship between non-family leadership and firm performance. We find that firms with a non-family member as board chair perform significantly worse than firms whose chair belongs to the family. Moreover, we show that the underperformance of nonfamily-chair firms is more pronounced when firms are under weaker outside monitoring and when the controlling families care less about family business longevity. The negative effect of a non-family chair is robust to a variety of endogeneity tests. We also dismiss alternative explanations other than concern for reputation. Overall, our empirical results suggest that the social norms regarding family reputation are important in shaping the controlling shareholders＇ expropriation incentives and firm performance.