Skip to main content
SpringerLink
Log in
Book cover

Responsible Corporate Governance pp 265–285Cite as

Ownership and Liability Decision

  • Chapter
  • First Online:

  • 1581 Accesses

Part of the book series: CSR, Sustainability, Ethics & Governance ((CSEG))

Abstract

Traditionally, accounting remains focused on the actions of the firm and ignores the effects of the firm upon its external environment. However, a growing number of researchers have accepted that several effects of the firm influence the external environment and have suggested that one of the roles of accounting should be to report the impact of the firm in this respect. This paper researches the effect of ownership on the liability decision concerning the increase of the knowledge on the accounting literature.

The methodology has two different frameworks. First, the literature review shows, on the one hand, evidence of ownership separate by nonfamily versus family owned firms to adopt an individualistic identity orientation, so they are motivated to firm self-interest and focus on financial performance (Bingham et al., J Bus Ethics 99:565–585, 2010). On the other hand, the liability decision making process focus on those family members that have the family as main shareholders of the firm (Agarwal and Nagarajan, J Financ 45(9):1325–1331, 1990; Anderson and Reeb, J Financ 58(3):1301–1328, 2003; Admin Sci Q 49(2):209–227, 2004; Gómez-Mejía et al., Admin Sci Q 53(1):106–137, 2007; Oro et al., Congresso Brasileiro de Contabilidade, 15–17, 2008, and Puerto, Corporate governance in family firms, effects of family control and corporate financial decisions. Universidad de Salamanca, 2010).

Second, the empirical analysis is a longitudinal exploratory analysis based on sample of 281 firms with shares listed on Bovespa Stock Exchange (São Paulo, Brazil). The accounting information was collected from database Economática®, from which classification is given to managers, controllers and family. Also, a series of hypotheses were prepared, which, were tested, having I mind the proposed relationship between liability and each firm of the sample. The author used was Benford law-based analysis, because it produces strong support for the research hypothesis.

The main results show the understanding of the liability decision in the context of family owned and nonfamily owned firms. Also, as an exploratory result, there is heterogeneity performing on the function of a standard of comparison and the test of the multivariate differences among firms which reflect events occurring in an identical period with consequences in similarity of the business. Enthusiastically, it is observed that a firm can have a very significant effect upon its external image. Actually, it changes the liability decision through its activities. Also, it can be seen that these different effects, in some circumstances, are viewed as beneficial or as detrimental to the accountability of the firm.

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   149.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   199.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   199.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

References

  • Abreu, R., Segura, L. C., Milani, M., & David, F. (2014). The effect of family ownership on the liability decision. 12th World Congress of Accounting Educators and Researchers, Florence, Italy.

    Google Scholar 

  • Agarwal, A., & Nagarajan, N. (1990). Corporate capital structure, agency costs, and ownership control: The case of all-equity firms. Journal of Finance, 45(9), 1325–1331.

    Article  Google Scholar 

  • Al-Ajmi, J., Hussain, H. A., & Al-Saleh, N. (2009). Decisions on capital structure in a Zakat environment with prohibition of riba: The case of Saudi Arabia. The Journal of Risk Finance, 10(5), 460–476.

    Article  Google Scholar 

  • Anderson, R. C., & Reeb, D. M. (2003). Founding-family ownership and firm performance: Evidence from the S&P 500. Journal of Finance, 58(3), 1301–1328.

    Article  Google Scholar 

  • Anderson, R. C., & Reeb, D. M. (2004). Board composition: Balancing family influence in S&P 500 firms. Administrative Science Quarterly, 49(2), 209–227.

    Google Scholar 

  • Andres, C. (2011). Family ownership, financing constraints and investment decisions. Applied Financial Economics, 21(22), 1641–1659.

    Article  Google Scholar 

  • Astrachan, J. H., & Skanker, M. C. (2003). Family business’s contribution to the US economy: A closer look. Family Business Review, 16, 211–219.

    Article  Google Scholar 

  • Barros, L. A. B. C. (2005). Decisões de Financiamento e de Investimento das Empresas sob a Ótica dos Gestores Otimistas e Excessivamente Confiantes. PhD Thesis. São Paulo: Universidade de São Paulo.

    Google Scholar 

  • Benford, F. (1938). The law of anomalous numbers. Proceedings of the American Philosophical Society, 78(4), 551–572.

    Google Scholar 

  • Berle, A. A., & Means, G. C. (1932). The modern corporation and private property. New York: Macmillan.

    Google Scholar 

  • Berson, Y., Oreg, S., & Dvir, T. (2005). Organizational culture as a mediator of CEO values and organizational performance. Academy of Management Proceedings, 29, 615–633.

    Google Scholar 

  • Bertucci, J. L., Campos, E. A., Pimentel, T. D., & Pereira, R. D. (2009). Mecanismos de Governança e Processos de Sucessão: um estudo sobre a influência dos elementos de governança corporativa na orientação do processo sucessório em uma empresa familiar. Revista Brasileira de Gestão de Negócios, 11(abr/jun), 152–167.

    Google Scholar 

  • Bingham, J., Dyer Jr., W., Smith, I., & Adams, G. (2010). A stakeholder identify orientation. Approach to corporate social performance in family firms. Journal of Business Ethics, 99, 565–585.

    Article  Google Scholar 

  • Bornholdt, W. (2005). Governança na empresa familiar. Porto Alegre: Bookman Publishing.

    Google Scholar 

  • Boubakari, A., & Feudjo, J. R. (2010). Corporate governance for the best financing choices: An empirical study from family firms in Northern Cameroon. International Journal of Economics and Finance, 2(2), 70–77.

    Article  Google Scholar 

  • Brito, G. A. S., Corrar, L. J., & Batistella, F. D. (2007). Fatores determinantes da estrutura de capital das maiores empresas que atuam no Brasil. Revista Contabilidade & Finanças, 18, 9–19.

    Article  Google Scholar 

  • Burkart, M., Panunzi, F., & Shleifer, A. (2003). Family firms. Journal of Finance, 58(9), 2167–2201.

    Article  Google Scholar 

  • Carlock, R. S., & Ward, J. L. (2000). Strategic planning for the family business: Parallel planning to unify the family and business. London: Palgrave.

    Google Scholar 

  • Colot, O., & Croquet, M. (2005). Les entreprises familiales sont-elles plus ou moins endettées que les entreprises non familiales? Centre du Recherche Warocqué, Faculté Warocqué, Université de Mont Hainaut.

    Google Scholar 

  • Dahl, R. A. (1972). A prelude to corporate reform. Business and Society Review, (Spring), 17–23.

    Google Scholar 

  • Dami, A. B. T., Rogers, P., Ribeiro, K. C. S., & Sousa, A. F. (2007). Corporate governance and ownership structure in brazil: Causes and consequences. Corporate Ownership and Control, 5(2), 1–15.

    Google Scholar 

  • Dedoussis, E., & Papadaki, A. (2010). Investment spending and corporate governance. Managerial Finance, 36(3), 201–224.

    Article  Google Scholar 

  • Deegan, C. (2002). The legitimising effect of social and environmental disclosures - a theoretical foundation. Accounting, Auditing & Accountability Journal, 15(3), 282–311.

    Article  Google Scholar 

  • Demsetz, H. (1983). The structure of ownership and the theory of the firm. Journal of Law and Economics., 26(2), 375–394.

    Article  Google Scholar 

  • Diamond, D. (1989). Reputation acquisition in debt markets. Journal of Political Economy, 4(97), 828–862.

    Article  Google Scholar 

  • Durtschi, C., Hillison, W., & Pacini, C. (2004). The effective use of benford’s law to assist in detecting fraud in accounting data. Journal of Forensic Accounting, 5, 17–34.

    Google Scholar 

  • Fama, E., & Jensen, M. (1983). Separation of ownership and control. Journal of Law and Economics, 26, 301–325.

    Article  Google Scholar 

  • Fama, E., & Miller, M. (1972). The theory of finance. New York: Dryden Press.

    Google Scholar 

  • Fiegenbaum, A., & Thomas, H. (1988). Attitudes toward risk and the risk-return paradox: Prospect theory explanations. Academy of Management Journal, 31, 85–109.

    Article  Google Scholar 

  • Fiegener, M. K. (2010). Locus of ownership and family involvement in small private firms. Journal of Management Studies, 47(2), 14–67.

    Article  Google Scholar 

  • Filatotchev, I., Lien, Y., & Piess, J. (2005). Corporate governance and performance in publicly listed, family-controlled firms: Evidence from Taiwan. Asia Pacific Journal of Management, 22(3), 257–283.

    Article  Google Scholar 

  • Firth, M. (1995). The impact of institutional stockholders and managerial interest on the capital structure of firms. Managerial and Decision Economics, 16, 167–175.

    Article  Google Scholar 

  • Forte, D. (2005). Estudo sobre a estrutura de capital das empresas brasileiras no período pós Plano Real (1995–2005). PhD Thesis. São Paulo: Universidade Presbiteriana Mackenzie.

    Google Scholar 

  • Geyer, D. (2010). Detecting fraud in financial data sets. Journal of Business & Economics Research, 8(7), 75–83.

    Google Scholar 

  • Gómez-Mejía, L. R., Haynes, K. T., Núñes-Nickel, M., Jacobson, K. J. L., & Moyano-Fuentes, J. (2007). Socioemotional wealth and business risks in family-controlled firms: Evidence from Spanish olive oil mills. Administrative Science Quarterly, 53(1), 106–137.

    Article  Google Scholar 

  • Greene, W. (2012). Econometric analysis. London: Prentice Hall.

    Google Scholar 

  • Hadani, M. (2007). Family matters: Founding family firms and corporate political activity. Business & Society, 46(4), 395–498.

    Article  Google Scholar 

  • Hair, J., Anderson, R., Tatham, R., & Black, W. (2012). Multivariate analysis. London: Prentice-Hall.

    Google Scholar 

  • Harris, M., & Raviv, A. (1991). The theory of capital structure. Journal of Finance, 46, 297–355.

    Article  Google Scholar 

  • Hill, T. (1995). The significant digit phenomenon. American Mathematical Monthly, 102(4), 322–327.

    Article  Google Scholar 

  • Hirshleifer, D., & Thakor, A. (1993). Managerial reputation, project choice and debt. Financial Management, 22(2), 145–160.

    Article  Google Scholar 

  • Hurlimann, W. (2006). Benford’s law from 1881 to 2006: A bibliography. Cornell Library, 1, 1–15.

    Google Scholar 

  • Instituto Brasileiro de Governança Corporativa (IBGC). (2007). Governança corporativa em empresas de controle familiar: Casos em destaque no Brasil. São Paulo: Saint-Paul Institute of Finance.

    Google Scholar 

  • Jensen, M. (1986). Agency costs of free-cash-flow, corporate finance, and takeovers. American Economic Review, 76, 323–329.

    Google Scholar 

  • Jensen, M., & Meckling, W. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3, 305–360.

    Article  Google Scholar 

  • Johnson, G. C. (2009). Using Benford’s law to determine if selected company: characteristics are red flags for earnings management. Journal of Forensic Studies in Accounting and Business, 3, 39–65.

    Google Scholar 

  • Junaid-ul-haq, Nasir, R. U., & Wasimullah. (2011). Pecking order and trade-off model: Theory vs practice. Interdisciplinary Journal of Contemporary Research in Business, 2(12), 346–357.

    Google Scholar 

  • Kayo, E. K., & Famá, R. (1997). Teoria da agência e crescimento: evidências empíricas dos efeitos positivos e negativos do endividamento. Caderno de Pesquisas em Administração, 2(5), 2–8.

    Google Scholar 

  • King, M. R., & Santor, E. (2008). Family values: Ownership structure, performance and capital structure of Canadian firms. Journal of Banking & Finance, 32, 2423–2432.

    Article  Google Scholar 

  • Kotey, B., & Meredith, G. G. (1997). Relationships among owner/manager personal values, business strategies, and enterprise performance. Journal of Small Business Management, 35(2), 12–35.

    Google Scholar 

  • Landstrom, H., & Winberg, J. (2000). Financial bootstrapping in small businesses: Examining managers’ resource acquisition behaviors. Journal of Business Venturing, 16, 235–254.

    Google Scholar 

  • LaPorta, R., Lopez-de-Silanes, F., & Shleifer, A. (1999). Corporate ownership around the world. Journal of Finance, 54, 471–517.

    Article  Google Scholar 

  • Leavell, H., & Maniam, B. (2009). A survey of small business debt financing practices. The Business Review, 1(1), 37–42.

    Google Scholar 

  • Lee, J. (2011). Corporate finance in family business groups. PhD Thesis. New York: New York University.

    Google Scholar 

  • Longenecker, J. G., Moore, C. W., Petty, J. W., & Palich, L. E. (2007). Administração de pequenas empresas. New York: Thomson.

    Google Scholar 

  • López-Garcia, J., & Sánchez-Andújar, S. (2007). Financial structure of the family business: Evidence from a group of small Spanish firms. Family Business Review, 20(4), 269–287.

    Article  Google Scholar 

  • Maher, M., & Akers, M. (2002). Using Benford’s law to detect fraud in the insurance industry. International Business & Economics Research Journal, 1(7), 550–565.

    Google Scholar 

  • Malmendier, U., & Tate, G. A. (2008). Who makes acquisitions? CEO overconfidence and market’s reaction. Journal of Financial Economics, 8(1), 20–43.

    Article  Google Scholar 

  • McConaughy, D.L. (1994). Founding-family-controlled corporations: An agency-theoretic analysis of corporate ownership structure and its impact upon corporate efficiency, value, and capital structure. Phd Thesis. University of Cincinnati.

    Google Scholar 

  • Modigliani, F., & Miller, M. (1958). The cost of capital, corporation finance and the theory of investment. American Economic Review, 48, 261–297.

    Google Scholar 

  • Modigliani, F., & Miller, M. (1963). Corporate income taxes and the cost of capital: A correction. American Economic Review, 53, 433–443.

    Google Scholar 

  • Moreira, M. M., & Puga, F. P. (2000). Como a indústria financia o seu crescimento – uma análise do Brasil pós-real. Revista de Economia Contemporânea, 5, 35–67.

    Google Scholar 

  • Mosebach, J. E. (2007). Founding family firms: Effective tax rates and dividend payout policies. Phd Thesis. Arkansas: University of Arkansas.

    Google Scholar 

  • Myers, S. (1984). The capital structure puzzle. Journal of Finance, 39(3), 575–592.

    Article  Google Scholar 

  • Newcomb, S. (1881). Note on the frequency of use of the different digits in natural numbers. American Journal of Mathematics, 4(1/4), 39–40.

    Article  Google Scholar 

  • Nigrini, M., & Mittermaier, L. J. (1997). The use of Benford’s law as an aid in analytical procedures. Auditing: A Journal of Practice & Theory, 16(2), 52–67.

    Google Scholar 

  • Oro, I. M., Beuren, I. M., & Hein, N. (2008). Análise da Relação entre a Estrutura de Capital e o Lucro Operacional nas diversas gerações de empresas familiares brasileiras. Congresso Brasileiro de Contabilidade, 15–17.

    Google Scholar 

  • Perobelli, F. F. C., & Fama, R. (2002). Determinantes da estrutura de capital: Aplicação a empresas de capital aberto brasileiras. Revista de Administração da Universidade de São Paulo, 37, 52–85.

    Google Scholar 

  • Perobelli, F. F. C., Silveira, A. M., & Barros, L. A. B. C. (2005). Fatores Determinantes da Estrutura de Capital: Novas Evidências no Brasil. São Paulo: Anais do V Encontro Brasileiro de Finanças da Sociedade Brasileira de Finanças (SBFIN).

    Google Scholar 

  • Pindado, J., & La Torre, C. (2008). Financial decisions as determinants of ownership structure: Evidence from Spanish family controlled firms. Managerial Finance, 34(12), 868–885.

    Article  Google Scholar 

  • Pinkham, R. S. (1961). On the distribution of first significant digits. The Annals of Mathematical Statistics, 32(4), 1223–1230.

    Article  Google Scholar 

  • Popper, K. R. (1975). A lógica da pesquisa científica. São Paulo: Cultrix.

    Google Scholar 

  • Puerto, I. R. (2010). Corporate governance in family firms, effects of family control and corporate financial decisions. PhD Thesis. Salamanca: Universidad de Salamanca.

    Google Scholar 

  • Quick, R., & Wolz, M. (2005). Benford’s law in German financial statements. Finance India, 19(4), 334–345.

    Google Scholar 

  • Rossato Neto, F. J., & Cavedon, N. R. (2004). Empresas familiares: Desfilando seus processos sucessórios. Cadernos EBAPE, 2(3), 15–22.

    Google Scholar 

  • Scarpin, J. E., Almeida, D. M., & Machado, D. G. (2012). Endividamento e lucratividade: um estudo em empresas familiares que compõem o índice IBRX-100 da BM&FBOVESPA. Revista Ambiente Contábil, 4(2), 93–109.

    Google Scholar 

  • Schulze, W. A., & Dino, R. N. (2004). The impact of distribution of ownership on the use of financial leverage in family firms. In Proceedings of the United States Association for Small Business and Entrepreneurship, Dallas.

    Google Scholar 

  • Segura, L. (2012). A influência da gestão e do controlo de familiares e do fundador sobre o endividamento das empresas abertas brasileiras: Evidencias Empíricas. PhD Thesis. São Paulo: Universidade Presbiteriana Mackenzie.

    Google Scholar 

  • Shleifer, A., & Vishny, R. (1986). Large shareholders and corporate control. Journal of Political Economy, 94(3), 461–488.

    Article  Google Scholar 

  • Shleifer, A., & Vishny, R. (1997). A survey of corporate governance. Journal of Finance, 52(2), 737–783.

    Article  Google Scholar 

  • Siqueira, T. V. (1998). Concentração da Propriedade nas Empresas Brasileiras de Capital Aberto. Revista do BNDES, 5(10), 37–62.

    Google Scholar 

  • Sirmon, D. G., Arregle, J., Hitt, M. A., & Webb, J. W. (2008). The role of family influence in firms’ strategic responses to threat of imitation. Entrepreneurship Theory and Practice, 30(10), 979–994.

    Article  Google Scholar 

  • Sirmon, D. G., & Hitt, M. A. (2003). Managing resources: Linking unique resources, management, and wealth creation in family firms. Entrepreneurship Theory and Practice, 4(27), 339–358.

    Article  Google Scholar 

  • Soares, R. O., & Kloeckner, G. O. (2008). Endividamento em firmas com alta propensão à expropriação: o caso de firmas com um controlador. Revista de Administração de Empresas (RAE), 48(4), 73–96.

    Google Scholar 

  • Solomons, D. (1974). Corporate social performance: A new dimension in accounting reports? In H. Edey & B. Yamey (Eds.), Debits, credits, finance and profits. London: Sweet & Maxwell.

    Google Scholar 

  • Stiglitz, J. E. (1968). A re-examination of the Modigliani-Miller theorem. American Economic Review, 59(5), 368–375.

    Google Scholar 

  • Stulz, R. (1990). Managerial discretion and optimal financing policies. Journal of Financial Economics, 26, 3–27.

    Article  Google Scholar 

  • Thaler, R., & Barberis, N. (2003). A survey of behavioral finance. In G. Constantinides, M. Harris, & R. Stulz (Eds.), Handbook of the economics of finance. New York: North Holland.

    Google Scholar 

  • Thomsen, S., & Pedersen, T. (1997). European ownership concentration: Causes and consequences. Institute of International Economics and Management. Copenhagen: Copenhagen Business School.

    Google Scholar 

  • Titman, S., & Wessels, R. (1988). The determinants of capital structure choice. Journal of Finance, 43(1), 1–19.

    Article  Google Scholar 

  • Wiseman, S. (2011). Digit distributions: What digits are really being used in hospitals?. Proceedings of the fourth York Doctoral Symposium on Computer Science. University of York.

    Google Scholar 

  • Wooldridge, J. (2010). Econometric analysis of cross section and panel data. Harvard: MIT Press.

    Google Scholar 

  • Zaha, S. A. (2003). International expansion of US manufacturing family businesses: The effect of ownership and Involvement. Journal of Business Venturing, 18, 495–512.

    Article  Google Scholar 

  • Zaha, S. A., Hayton, J. C., Neubaum, D. O., Dibrell, C., & Craig, J. (2008). Culture of family commitment and strategic flexibility: The moderating effect of stewardship. Entrepreneurship Theory and Practice, 2, 1035–1054.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Instituto Politécnico da Guarda, UDI-IPG CICF-IPCA, Guarda, Portugal

    Rute Abreu & Fátima David

  2. Mackenzie Presbyterian University, São Paulo, Brasil

    Liliane Cristina Segura

  3. School of Applied Sciences at the State University of Campinas – UNICAMP, São Paulo, Brazil

    Marco Milani

Authors
  1. Rute Abreu
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Liliane Cristina Segura
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Marco Milani
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Fátima David
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Rute Abreu .

Editor information

Editors and Affiliations

  1. Department of Management Theory, Warsaw School of Economics, Warsaw, Poland

    Maria Aluchna

  2. Guildhall Faculty of Business and Law, London Metropolitan University, London, United Kingdom

    Samuel O. Idowu

Rights and permissions

Reprints and permissions

Copyright information

© 2017 Springer International Publishing AG

About this chapter

Cite this chapter

Abreu, R., Segura, L.C., Milani, M., David, F. (2017). Ownership and Liability Decision. In: Aluchna, M., Idowu, S. (eds) Responsible Corporate Governance. CSR, Sustainability, Ethics & Governance. Springer, Cham. https://doi.org/10.1007/978-3-319-55206-4_14

Download citation

Publish with us

Policies and ethics

Search

Navigation