FAMILY OWNERSHIP AND CONTROL IN LARGE FIRMS: THE GOOD, THE BAD, THE IRRELEVANT -- AND WHY

There is a major debate regarding the role of concentrated family ownership and control in large firms, with three positions suggesting that such concentration is (1) good, (2) bad, or (3) irrelevant for firm performance. This article reports two studies to shed further light on this debate. Study 1 uses 744 publicly listed large firms in eight Asian countries to test competing hypotheses on the impact of the combination of family ownership and control on firm performance. On a country-by-country basis, our findings support all three positions. On an aggregate, pooled sample basis, the results support the “irrelevant” position. Study 2, based on a sample of 688 firms from the same eight Asian countries, endeavors to answer why Study 1 obtains different results for different countries. We theorize and document that Study 1 findings may be systematically associated with the level of shareholder protection embodied in legal and regulatory institutions. Study 2 thus sketches the contours of a cross-country, institution-based theory of corporate governance. Overall, our two studies lead to a finer-grained and more cumulative understanding of the crucial debate on family ownership and control in large firms.http://deepblue.lib.umich.edu/bitstream/2027.42/57220/1/wp840 .pd

FAMILY OWNERSHIP AND CONTROL IN LARGE FIRMS: THE GOOD, THE BAD, THE IRRELEVANT – AND WHY

There is a major debate regarding the role of concentrated family ownership and control in large firms, with three positions suggesting that such concentration is (1) good, (2) bad, or (3) irrelevant for firm performance. This article reports two studies to shed further light on this debate. Study 1 uses 744 publicly listed large firms in eight Asian countries to test competing hypotheses on the impact of the combination of family ownership and control on firm performance. On a country-by-country basis, our findings support all three positions. On an aggregate, pooled sample basis, the results support the “irrelevant” position. Study 2, based on a sample of 688 firms from the same eight Asian countries, endeavors to answer why Study 1 obtains different results for different countries. We theorize and document that Study 1 findings may be systematically associated with the level of shareholder protection embodied in legal and regulatory institutions. Study 2 thus sketches the contours of a cross-country, institution-based theory of corporate governance. Overall, our two studies lead to a finer-grained and more cumulative understanding of the crucial debate on family ownership and control in large firms.corporate governance, family firm, ownership, Asia Pacific

Entrepreneurship and the Barrier to Exit: How Does an Entrepreneur-Friendly Bankruptcy Law Affect Entrepreneurship Development at a Societal Level?

Does an entrepreneur-friendly bankruptcy law encourage more entrepreneurship development at a societal level? How does bankruptcy law affect entrepreneurship development around the world? Drawing on a real options perspective, we argue that if bankrupt entrepreneurs are excessively punished for failure, they may pass potentially high-return but inherently high-risk opportunities. Amassing a longitudinal, cross-country data base from 35 countries spanning ten years, we find that a lenient, entrepreneur-friendly bankruptcy law encourages entrepreneurs to take risks and thus let entrepreneurship prosper. Components of an entrepreneur-friendly bankruptcy law are: (1) the availability of a reorganization bankruptcy option, (2) the time spent on bankruptcy procedure, (3) the cost of bankruptcy procedure, (4) the opportunity to have a fresh start in liquidation bankruptcy, (5) the opportunity to have an automatic stay of assets, (6) the opportunity for managers to remain on the job after filing for bankruptcy, and (7) the protection of creditors at the time of bankruptcy.

Corporate Philanthropy and CEO Outside Directorships Under Authoritarian Capitalism

Scholars have long suggested that CEOs can benefit from corporatephilanthropy. However, little is known about this relationship in contextsof authoritarian capitalism such as China, where the state not only uses itscontrol of economic entities to pursue social goals but also plays a key rolein CEOs’ careers. We theorize how corporate philanthropy among statecontrolledfirms increases the CEO’s likelihood of receiving career benefitsfrom the state in the form of outside directorships. Outside directorshipsrepresent an important form of social capital in the Chinese context, andcorporate philanthropy is an important mechanism through which socialcapital can be acquired. In addition, we theorize how two factors—thedegree of state ownership and the number of independent directors onthe CEO’s board—moderate this relationship. Analyzing a 12-year panelof state-controlled, publicly-listed firms in China comprising 6,594 firm-yearobservations, we find general support for our ideas. In so doing, wecontribute to scholarship on the business–society relationship and corporategovernance in the context of authoritarian capitalism