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Board characteristics effects on performance in family and non-family business: a multi-theoretical approach

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Abstract

This paper examines the role of the board of directors in influencing the value of Italian listed firms from 2003 to 2013. In particular, employing agency, stewardship and resource dependence theories, the study aims to compare board characteristics in family and non-family firms and define the theory that best applies to family firms. Empirical results show that the presence of CEO duality and busy directors has a positive effect on the value of family firms, while gender diversity has a negative impact on the value when a member of the family leads a family firm. Conversely, the size of the board positively affects the value of non-family firms. Our main findings suggest the prevalence, in family firms, of the benefits of the board structure argued by stewardship and resource dependence theories rather than the disadvantages expected from agency theory.

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Notes

  1. According to the Italian corporate governance Code (Codice di Autodisciplina), inspired by the EC Recommendation No. 162/2005, the directors are qualified as independent when they are not connected with the company’s management or controlling shareholders.

  2. In general, the Hausman test suggests a preference for the fixed-effect model rather than the random-effect model.

  3. We used the lag of the dependent variable from t-1 to t-2 and the lag from t-1 to t-3 of the endogenous variables that are most likely simultaneous to determine firm value (cash holdings, size, leverage, sales growth and board variables). The remaining variables are considered exogenous.

  4. See Arellano and Bond (1991) for further explanation.

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Acknowledgements

We thank Editor Lucie Courteau and two anonymous reviewers for helpful comments on earlier versions. We also would like to thank Andrea Melis and participants on 4th JMG Conference for helpful discussions and comments.

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Authors and Affiliations

  1. Department of Business Administration and Law, University of Calabria, Ponte Pietro Bucci, 87036, Arcavacata di Rende, Cosenza, Italy

    Franco Ernesto Rubino, Paolo Tenuta & Domenico Rocco Cambrea

Authors
  1. Franco Ernesto Rubino
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  2. Paolo Tenuta
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  3. Domenico Rocco Cambrea
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Correspondence to Franco Ernesto Rubino.

Appendix

Appendix

See Table A.1.

Table A.1 Variables descriptions
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Rubino, F.E., Tenuta, P. & Cambrea, D.R. Board characteristics effects on performance in family and non-family business: a multi-theoretical approach. J Manag Gov 21, 623–658 (2017). https://doi.org/10.1007/s10997-016-9363-3

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