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Family Ownership and Investment Performance
Jönköping University, Jönköping International Business School, JIBS, Economics.
2010 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This dissertation provides an economic analysis of families as owners of large listed firms. The essential research question is whether family ownership provides an efficient form of governance. Family ownership and control is evaluated from different angles; how ownership, control, management, and board structure affects firm performance, and executive compensation.

Chapter two “A Contractual Perspective of the Firm with an Application to the Maritime Industry” is a conceptual paper analyzing the contractual structure of a firm. The chapter conceptualizes the relations between firms, and markets, and gives a transaction cost perspective of why firms are organized the way they are.

The third chapter “The Impact of Vote Differentiation on Investment Performance in Listed Family Firms” investigates ownership and control in Swedish family controlled firms. The analysis shows that family control is beneficial, but only if voting rights and cash-flow rights are aligned.

The fourth chapter “Family Control and Executive Compensation” analyses whether families use remuneration as a way to expropriate minority shareholders. The study shows that managers in family-controlled firms have alower share of variable compensation than managers in non-family controlled firms. The analysis shows further that family control has a reducing effect on the total level of CEO-compensation.

The last chapter “Board of Directors, Dependency, and Returns on Investment” investigates if there is a relationship between ownership structure, board of directors, and firm performance. The marginal q analysis indicate that firm dependent directors have a negative impact on firms’ investment performance. Owner-dependent and employee elected directors do not affect firm investment performance.

To sum up, the empirical results show that family ownership and control affects remuneration in listed firms, and the firm investment performance. The analysis further shows that there are clear differences in the ownership and governance structure between family and non-family controlled firms.

Place, publisher, year, edition, pages
Jönköping: 2010 , 2010. , p. 38
Series
JIBS Dissertation Series, ISSN 1403-0470 ; 066
National Category
Economics
Identifiers
URN: urn:nbn:se:hj:diva-14518ISBN: 9789186345143 (print)OAI: oai:DiVA.org:hj-14518DiVA, id: diva2:394066
Public defence
2010-10-22, B1033, Gjuterigatan 5, Jönköping, 16:53 (English)
Opponent
Supervisors
Available from: 2011-02-10 Created: 2011-02-01 Last updated: 2016-10-07Bibliographically approved
List of papers
1. A contractual perspective of the firm with an application to the maritime Industry
Open this publication in new window or tab >>A contractual perspective of the firm with an application to the maritime Industry
2009 (English)In: The Modern Firm, Corporate Governance and Investment, Cheltenham, UK: Edward Elgar , 2009, 1, p. 63-81Chapter in book (Refereed)
Place, publisher, year, edition, pages
Cheltenham, UK: Edward Elgar, 2009 Edition: 1
National Category
Economics
Identifiers
urn:nbn:se:hj:diva-10461 (URN)978 1 84844 225 2 (ISBN)
Available from: 2009-09-29 Created: 2009-09-29 Last updated: 2016-10-07Bibliographically approved
2. The Impact of Vote Differentiation on Investment Performance in Listed Family Firms
Open this publication in new window or tab >>The Impact of Vote Differentiation on Investment Performance in Listed Family Firms
2010 (English)In: Family Business Review, ISSN 0894-4865, E-ISSN 1741-6248, Vol. 23, no 4, p. 327-340Article in journal (Refereed) Published
Abstract [en]

This article investigates the effects of separation of ownership and control because of vote differentiation on listed family firms’ investment performance. The authors study the question of whether family-controlled firms have better investment performance than nonfamily firms and whether this investment performance is negatively affected by a separation of ownership and control because of vote differentiation. Marginal q is used as a performance measure. The empirical analysis shows that family control has a positive impact on investment performance when ownership and control are aligned, whereas separation of ownership and control in terms of vote-differentiated shares reduce investment performance.

Keywords
corporate governance, family firms, dual-class shares, investments, firm performance
National Category
Business Administration
Identifiers
urn:nbn:se:hj:diva-13944 (URN)10.1177/0894486510379001 (DOI)
Available from: 2010-12-14 Created: 2010-12-14 Last updated: 2017-12-11Bibliographically approved
3. Family control and executive compensation
Open this publication in new window or tab >>Family control and executive compensation
(English)Manuscript (preprint) (Other academic)
Abstract [en]

This paper examines the effect of family ownership and control on executive compensation in listed firms during the period 2003-2008. The descriptive statistics show that CEOs in non-family-controlled firms have a significantly higher share of variable compensation than CEOs in family-controlled firms, they also receive remuneration in stock options relatively more often. The econometric analysis shows that family control and ownership concentration reduce CEO compensation whereas multiple-class shares increase the level of compensation. In line with the findings of previous research, firm size and performance are positively related to CEO compensation.

Keywords
Corporate governance, executive compensation, and family ownership
National Category
Economics
Identifiers
urn:nbn:se:hj:diva-31945 (URN)
Available from: 2016-10-07 Created: 2016-10-07 Last updated: 2016-10-07Bibliographically approved
4. Board of directors, dependency, and returns on investment
Open this publication in new window or tab >>Board of directors, dependency, and returns on investment
(English)Manuscript (preprint) (Other academic)
Abstract [en]

This paper examines the relationship between board dependency, family control, and return on investments in Swedish listed firms. Board dependency is defined with regard to the principal owners (family and non-family owners), to the firm management, and to employees. The definition of dependency, as applied in the Swedish Code of Corporate Governance, together with good accessibility of detailed data on corporate governance variables, makes it possible to apply a precise measure of board dependency.

The analysis indicates that total board dependency has a significantly negative effect on returns on investment. The negative effect originates from the firm-related directors, whereas dependency on principal owners, families, and employees does not have any impact on firm performance.

Keywords
Board dependency, family control, returns on investment, marginal q
National Category
Economics
Identifiers
urn:nbn:se:hj:diva-31946 (URN)
Available from: 2016-10-07 Created: 2016-10-07 Last updated: 2016-10-07Bibliographically approved

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