Ownership Dispersion and Capital Structures in Family firms: A study of closed medium sized enterprises

Family firms are entities that possess and contribute greatly to all economies worldwide. In the following study we investigate capital structures and ownership dispersion among Swedish family firms. In order to find concluding results, we proceed with a regression between leverage and family business, leverage and family firm age, and leverage and ownership dispersion. Our regression outcomes support a U- shaped relationship between family ownership dispersion and leverage, but do not confirm a relation between leverage and family business. Earlier studies made in the field have generated differing results; however, there are some studies that are actually in line with our findings. A unique database developed at Jönköping University is used that enables us to obtain access to firm level data. Earlier studies in the same genre have only had access to industry level data.Family firms; Capital structure; Closed medium sized enterprises; Ownership Dispersion; Corporate Governance

Financing decisions in family businesses: the Portuguese example

In a context of extreme significance of family businesses in the Portuguese business fabric and their representativeness in terms of GDP and employability, it is essential to assess the financing options and resources availability, as well as the determinants behind these firms' decision making process. This study aims to prove the suitability of the Pecking Order Theory and Trade-Off Theory to a sample of 460 Portuguese family businesses. Proven assumptions concern the existance of a negative relationship between age and debt and also between profitability (ROA) and debt ratio, which proves the adequacy of two premisses inherent to the Pecking Order Theory for our sample. According to the literature, this negative relationship between variables might be consequence of a preference for this kind of businesses to resort to internal financing as the first option when considering financing options, in order to preserve family reputation, control and ownership and also heritage perpetuation.Num contexto de extrema significância das empresas familiares no tecido empresarial português e da sua representatividade em termos de PIB e empregabilidade, torna-se essencial aferir as opções de financiamento e recursos de que dispõem, bem como as determinantes por detrás do processo de tomada de decisão destas empresas. Este estudo pretende aferir a adequação da "Pecking Order Theory" e da "Trade-Off Theory" numa amostra de 460 empresas familiares portuguesas. Os pressupostos comprovados dizem respeito à existência de uma relação negativa entre a idade e a dívida e, ainda, entre o ROA e o rácio de dívida, o que prova a adequação de duas premissas inerentes à "Pecking Order Theory" para a nossa amostra. De acordo com a literatura, esta relação negativa entre as variáveis pode ser consequência de uma preferência por parte deste tipo de empresas em recorrer a recursos internos, enquanto primeira opção na hora de considerar o financiamento, a fim de preservar a reputação, controlo e propriedade famíliar, bem como a perpetuação do seu património

Lone founders, types of private family firms and firm performance

The purpose of this article is to provide an explanation for the contradictory findings about the links between private family businesses (FBs) and organisational performance. The paper suggests that lone founder firms determine the results by explaining the comparative performance of different private FBs and NFBs. In addition, we develop a parsimonious typology of private FBs that exploits the interactions of the components of family involvement to show that firms that achieve to avoid or minimize traditional agency conflicts tend to outperform the firms that do not. It appears that the use of ownership dispersion as a governance mechanism shepherds and monitors performance progress, and the conflict between large and minority shareholders seems to be more costly than the conflict between owners and managers

Socioemotional wealth and human resource policies: effects on family firm performance

Purpose: This study analyses whether human resource management (HRM), through the use of four sets of high-performance work policies (HPWPs) (i.e., selection, training, motivation, and opportunity policies), mediates the relationship between socioemotional wealth (SEW)?defined as a unique set of nonfinancial family goals?and firm financial performance when family firms face a high-risk context. Design/methodology/approach: Hypotheses were statistically tested using a structural equation modelling methodology with a cross-sectional sample of 196 mediumsized and private family firms in a high-risk context in Spain. Findings: The results indicate that the relationship between SEW and financial performance in family firms is fully mediated by the use of HPWPs, especially by training and motivation HR policies. The importance given to preserving SEW influences the use of four sets of HPWPs when family firms show clear evidence of being confronted by a financial decline (i.e., a high-risk context). However, to improve their financial results to avoid the firm's failure and thus the loss of their SEW, only those HR policies that focus on training and motivation made a significant and positive contribution to the firm financial performance. Originality: This study contributes to the literature on family firms and HRM by adopting an alternative theoretical framework to understand how the importance of nonfinancial family goals may affect employee structures and management policies, thereby improving financial performance in family firms

High-performance work systems in family firms: a mixed gamble approach

Research on the use of high-performance work systems (HPWSs) in family firms has yielded mixed evidence. This study aims to bridge this gap by using the socioemotional wealth (SEW) approach and the behavioral agency model (BAM) to explain why certain family firms have a greater incentive to use HPWS. We argue that the decision of family firms to implement HPWS is part of a mixed-gamble scenario of balancing risks with financial and family wealth prospects. Our results from 453 Spanish medium-sized and private family firms confirm that the importance of preserving SEW has a positive effect on the adoption of HPWS and that this influence is particularly pronounced in high-risk firms whose management is mainly controlled by family members and by the second generation. These findings contribute to the literature by explaining how using HPWS by family firms is significantly contingent on business risk

Connecting cities, revitalising regions: the centrality of cities to regional development

This editorial and accompanying themed issue reflect on the centrality of cities to regional development. Focusing on the role and function of cities in processes of innovation, production, distribution, and consumption as both individual sites and as networks of sites of production, they examine classic questions in economic geography about concentration, diffusion, and flows of labor and capital and the policy regimes that govern that movement. They also contribute empirically and theoretically to opening up broader conversations from a global perspective regarding how cities serve as nodes in global networks both anchoring and ultimately locating both global and regional flows of capital and labor. Finally, they identify what is at stake in debates over cities and regional development

Traditional Governance and Innovative Strategies in Italian Family SMEs: Evidence from Tuscany

Governance in family businesses is a relatively recent research topic in the field of management studies. Much research has sought to shed light on the factors that shape the relationship between governance structures and corporate strategies. Nevertheless, very little research has specifically addressed the relationships between the configuration of the Board of Directors and the firm’s willingness to carry out innovative strategies. Our study aims to shed light on the relationship between the corporate governance structures and the pace of innovation within family SMEs. Evidence from three long-lived family-owned SMEs located in Tuscany (Italy) highlights that the intensity of the innovation processes may not be tied to the Board’s composition

Ownership structure and agency costs: evidence from the insurance industry in Jordan

Purpose: This study investigated the impact of corporate ownership structure on agency costs in the insurance industry. Design/methodology/approach: The study sample included 23 insurance companies listed on the Amman Stock Exchange (ASE) from 2010 to 2019. Panel regression was used to account for the firm- and time-specific unobservable variables and system-GMM estimation was used to address endogeneity concerns. Findings: The results show that managerial ownership positively (negatively) affects selling, general and administrative (SG&A) expenses (assets turnover), implying that unmonitored managers engage in activities that serve their own interests rather than those of shareholders. The largest shareholder's ownership has no impact on agency costs, implying that the ownership of the largest shareholder is irrelevant. However, as the wedge between the percentage of capital owned by the largest shareholders and managers increases, SG&A expenses (efficiency ratio) decrease (increases), indicating that the existence of large non-management shareholders reduces agency costs. After accounting for the endogeneity problem, the impact of ownership structure on agency costs measured by asset turnover remains robust. Originality/value: To the best of the authors' knowledge, this study is the first to provide unique evidence and useful insights into the determinants of agency costs from a frontier market in the Middle East and North Africa (MENA), with a focus on the insurance sector. Additionally, this study uses a new measure of separation between ownership and control by calculating the wedge between managers' and large shareholders' ownership

Politización y pericia financiera en las cajas de ahorros españolas: Patrones en la configuración de sus consejos

This study examines the politicization and financial knowledge-experience of the boards of directors of Spanish savings banks. To do this, we build a database with the biographic information of directors during the period 2004-2010. The results of the cluster analysis show the existence of four types of boards, depending on the politicization and the financial expertise of its members. Furthermore, we find that savings banks with higher financial expertise in their boards have higher levels of financial solvencyEsta investigación profundiza en la politización y conocimientos-experiencia financiera de los consejos de administración de las cajas de ahorros españolas. Para ello, construimos una base de datos con la información biográfica de sus consejeros del período 2004-2010. Los resultados del análisis clúster revelan la existencia de cuatro tipos de consejos en función de la politización y la pericia financiera de sus miembros. Asimismo, encontramos que las cajas con mayor pericia financiera en su consejo presentan mayores niveles de solvencia financier

Private family firms, generations and bank debt

©2022 The Authors. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/. This document is the Published version of a Published Work that appeared in final form in Accounting & Finance. To access the final edited and published work see https://doi.org/10.1111/acfi.13013This paper focuses on the use of bank debt by private family firms and whether it is higher for the first generations of family businesses than for their descendants and subsequent generations. We use a unique hand-collected data set of 4,041 private Spanish firms for the years 2004 to 2013. We find statistical evidence that family-controlled firms make greater use of bank credit. Moreover, we show that first-generation family firms acquire more bank debt than those of second and subsequent generations. Furthermore, during financial crises, family-controlled firms were subjected to less rationing, with increased bank financing for first generations