Family power in the boardroom: is it counterbalanced by other large shareholders?

• M. Sacristán-Navarro ^[1] ; L. Cabeza-García ^[2] ; S. Gómez-Ansón ^[3]
  1. [1] Universidad Rey Juan Carlos

     Universidad Rey Juan Carlos

     Madrid, España

     
  2. [2] Universidad de León

     Universidad de León

     León, España

     
  3. [3] Universidad de Oviedo

     Universidad de Oviedo

     Oviedo, España

     

  Mostrar afiliaciones +
• Localización: Revista española de financiación y contabilidad, ISSN 0210-2412, Vol. 53, Nº 2, 2024, págs. 203-231
• Idioma: inglés
• DOI: 10.1080/02102412.2023.2197329
• Texto completo no disponible (Saber más ...)
• Resumen

  • This study analyses how the existence, the number, their ownership, and the identity of other large shareholders coexisting with families, influence disproportionate family board power of listed firms. Using a database of the Spanish market over an 8-year period, the results show that the number of other large shareholders and their relative ownership over the family increase disproportionate family board power in the boardroom. Moreover, when the other large shareholders have more ownership than the family, disproportionate family board representation increases. The findings also highlight the significance of the other large shareholders’ identity. Foreign investors reduce disproportionate family board power, while it does not appear to be affected by families and individuals or institutional investors. In sum, this research confirms the use of disproportionate board power by families as a control-enhancing mechanism to entrench family power on the board and protect their socioemotional wealth.

• Referencias bibliográficas
  • Acero, I., & Alcalde, N. (2016). Controlling shareholders and the composition of the board: Special focus on family firms. Review of Managerial...
  • Adams, R. B., & Ferreria, D. (2007). A theory of friendly boards. The Journal of Finance, 62(1), 217–250. https://doi.org/10.1111/j.1540-6261.2007.01206.x
  • Adams, R. B., Hermalin, B. E., & Weisbach, M. S. (2010). The role of boards of directors in corporate governance: A conceptual framework...
  • Aguilera, R., & Crespí, R. (2012). Firm family firms: Current debates of corporate governance in family firms. Journal of Family Business...
  • Aguilera, R. V., & Jackson, G. (2003). The cross-national diversity of corporate governance: Dimensions and determinants. Academy of Management...
  • Anderson, R. C., & Reeb, D. M. (2003). Founding-family ownership and firm performance. Evidence from the S&P 500. The Journal of Finance,...
  • Attig, N., Guiedhami, O., & Mishra, D. (2008). Multiple large shareholders, control contests and implied cost of equity. Journal of Corporate...
  • Bammens, Y., Voordeckers, W., & Van Gils, A. (2008). Boards of directors in family firms: A generational perspective. Small Business Economy,...
  • Bennedsen, M., & Wolfenzon, D. (2000). The balance of power in closely held corporations. Journal of Financial Economics, 58(1–2), 113–140....
  • Benton, R. A. (2016). Corporate governance and nested authority: Cohesive network structure, actor-driven mechanisms and the balance of power...
  • Berrone, P., Cruz, C., & Gómez-Mejía, L. (2012). Socioemotional wealth in family firms: Theoretical dimensions, assessment approaches,...
  • Boateng, A., & Huang, W. (2017). Multiple large shareholders, excess leverage and tunneling: Evidence from an emerging market. Corporate...
  • Cai, C., Hillier, D., & Wang, J. (2015). The cost of multiple large shareholders. Financial Management, 45(2), 401–430. https://doi.org/10.1111/fima.12090
  • Cao, F., Peng, S., & Ye, K. (2019). Multiple large shareholders and corporate social responsibility reporting. Emerging Markets Review,...
  • Cheng, M., Lin, B., & Wie, M. (2013). How does the relationship between multiple large share- holders affect corporate valuations? Evidence...
  • Claessens, S., Djankov, S., & Lang, L. (2000). The separation of ownership and control in East Asian corporations. Journal of Financial...
  • Debicki, B. J., Kellermans, F. W., Chrisman, J. J., Pearson, A. W., & Spencer, B. A. (2016). Development of a socioemotional wealth importance...
  • Dey, A., Nikolaev, V., & Wang, X. (2009). Disproportional control rights and the bonding role of debt. Retrieved from: https://ssrn.com/abstract=1516351.
  • Edmans, A. (2014). Blockholders and corporate governance. Annual Review of Financial Economics, 6(1), 23–50. https://doi.org/10.1146/annurev-financial-110613-034455
  • Edmans, A., & Manso, G. (2011). Governance through trading and intervention: A theory of multiple blockholders. The Review of Financial...
  • European Family Businesses. (2012). Family businesses statistics, EFB position paper. Retrieved from http://www.europeanfamilybusinesses.eu/publications/5/29/Family-Business-Statistics
  • Faccio, M., & Lang, L. (2002). The ultimate ownership of Western European corporations. Journal of Financial Economics, 65(3), 365–395....
  • Fama, E., & Jensen, M. (1983). Separation of ownership and control. The Journal of Law & Economics, 26(2), 301–325. https://doi.org/10.1086/467037
  • Fang, Y., Hu, M., & Yang, Q. (2018). Do executives benefit from shareholder disputes? Evidence from multiple large shareholders in Chinese...
  • Forst, A., Hettler, B., & Barniv, R. R. (2019). Insider ownership and financial analysts’ information environment: Evidence from dual...
  • García-Ramos, R., Díaz-Díaz, B., & García-Olalla, M. (2017). Independent directors, large shareholders and firm performance: The generational...
  • Gersick, K. E., Davis, J. A., McCollom-Hampton, M., & Lansberg, I. (1997). Generation to generation: Life cycles of the family business....
  • Gomez-Mejia, L. R., Cruz, C., Berrone, P., & De Castro, J. (2011). The bind that ties: Socioemotional wealth preservation in family firms....
  • Gómez-Mejía, L., Haynes, K. T., Núñez-Nickel, M., Jacobson, K. L. J., & Moyano-Fuentes, J. (2007). Socioemotional wealth and business...
  • Gómez-Mejía, L., Makri, M., & Larraza-Kintana, M. (2010). Diversification decisions in family controlled firms. Journal of Management...
  • González, M., Guzmán, A., Pombo, C., & Trujillo, M. A. (2014). Family involvement and dividend policy in closely-held firms. Family Business...
  • Greene, W. H. (1999). Análisis econométrico. Prentice Hall Iberia.
  • Gudri, A. F., Guedri, Z., & Delmar, F. (2017). Multiple blockholder structures and family firm performance. Entrepreneurship Theory &...
  • Hair, J. F., Black, B., Babin, B., & Anderson, R. E. (2010). Multivariate data analysis (6th ed.).Prentice-Hall.
  • Hambric, D. C., & D’aveni, R. (1992). Top team deterioration as part of the downward spiral of large corporate bankruptcies. Management...
  • Heckman, J. (1979). Sample selection bias as a specification error. Econométrica, 47(1), 153–161. https:/ doi.org/10.2307/1912352
  • Hermalin, B., & Weisbach, M. (1988). The determinants of board composition. The Rand Journal of Economics, 19(4), 589–606. https://doi.org/10.2307/2555459
  • Hermalin, B., & Weisbach, M. (1998). Endogenously chosen boards of directors and their monitoring of the CEO. The American Economic Review,...
  • Hettler, B., & Forst, A. (2019). Disproportionate insider control and firm performance. Accounting & Finance, 59(2), 1101–1130. https://doi.org/10.1111/acfi.12279
  • Holderness, C. (2009). The myth of diffuse ownership in the United States. The Review of Financial Studies, 22(4), 1377–1408. https://doi.org/10.1093/rfs/hhm069
  • Jara-Bertin, M., López-Iturriaga, F., & López de Foronda, O. (2008). The contest to the control in European family firms: How other shareholders...
  • Jara, M., López-Iturriaga, F., San-Martín, P., & Saona, P. (2019). Corporate governance in Latin American firms: Contestability of control...
  • Jewartowski, T., & Kaldonski, M. (2015). Family control and debt when dual class shares are restricted: The case of Poland. Emerging Markets...
  • Jones, C. D., Makri, M., & Gómez-Mejía, L. R. (2008). Affiliate directors and perceived risk bearing in publicly traded, family–controlled...
  • Kang, J. K., Luo, J., & Seung, H. (2018). Are institutional investors with multiple blockholdings effective monitors? Journal of Financial...
  • Kellermanns, F. W., Eddleston, K., & Zellweger, T. (2012). Extending the socioemotional wealth perspective: A look at the dark side. Entrepreneurship...
  • Kleinbaum, D. G., Kupper, L. L., & Muller, K. E. (1998). Applied regression analysis and other multivariable methods. PWS-KENT, Publishing...
  • Laeven, L., & Levine, R. (2008). Complex ownership structures and corporate valuations. The Review of Financial Studies, 21(2), 579–604....
  • La Porta, R., López de Silanes, F., & Shleifer, A. (1999). Corporate ownership around the world. The Journal of Finance, 54(2), 471–517....
  • Lehn, K. M., Patro, S., & Zhao, M. (2009). Determinants of the size and composition of US corporate boards: 1935- 2000. Financial Management,...
  • López de Foronda, O., López-Iturriaga, F., & Santamaría, M. (2007). Ownership structure, sharing of control and legal framework: International...
  • Mace, M. L. (1971). Directors: Myth and reality. Harvard University.
  • Maury, B., & Pajuste, A. (2005). Multiple large shareholders and firm value. Journal of Banking & Finance, 29(7), 1813–1834. https://doi.org/10.1016/j.jbankfin.2004.07.002
  • Miller, D., & Le Breton–Miller, I. (2014). Deconstructing socioemotional wealth. Entrepreneurship Theory & Practice, 38(4), 713–720....
  • Miller, D., Le-Breton Miller, I., Lester, R., & Canella, A. (2007). Are family firms really superior performers? Journal of Corporate...
  • Nordqvist, M., Sharma, P., & Chirico, F. (2014). Family firm heterogeneity and governance: A configuration approach. Journal of Small...
  • Pagano, M., & Roell, A. (1998). The choice of stock ownership structure: Agency costs, monitoring and the decision to go public. The Quarterly...
  • Rock, E. (2015). Institutional investors in corporate governance. Paper 1458. Faculty Scholarship at Penn Law, Rossi, F., Barth, J. R., &...
  • Ruiz-Mallorquí, M. V., & Santana-Martín, D. J. (2009). Ultimate institutional owner and takeoverdefences in the controlling versus minority...
  • Ruiz-Mallorquí, M. V., & Santana-Martín, D. J. (2011). Dominant institutional owners and firm value. Journal of Banking & Finance,...
  • Sacristán-Navarro, M., Gómez-Ansón, S., & Cabeza-García, L. (2011). Large shareholders’ com- binations in family firms: Prevalence and...
  • Sacristán-Navarro, M., Gómez-Ansón, S., & Cabeza-García, L. (2014). Other large shareholders in family firms: Do they monitor? In P. Poutzirouris,...
  • Sacristán-Navarro, M., Gómez-Ansón, S., & Cabeza-García, L. (2015). The company you keep. The role of other large shareholders in family...
  • Santos, M. S., Moreira, A. C., & Vieira, E. S. Ownership concentration, contestability, family firms, and capital structure. (2014). Journal...
  • Santos, M. S., Moreira, A. C., & Vieira, E. S. (2015). Governance with complex structures: Evidence from western European countries. Journal...
  • Sciascia, S., & Mazzola, P. (2008). Family involvement in ownership and management: Exploring nonlinear effects on performance. Family...
  • Setia-Atmaja, L., Tanewski, G., & Skully, M. (2009). The role of dividends, debt and board structure in the governance of family controlled...
  • Sur, S., Luvina, E., & Magnan, M. (2013). Why do boards differ? Because owners do: Assessing ownership impact on board composition. Corporate...
  • Thomsen, S., & Pedersen, T. (2000). Ownership structure and economic performance in the largest European countries. Strategic Management...
  • Villalonga, B., & Amit, R. (2009). How are U.S. family firms controlled? The Review of Financial Studies, 22(8), 3047–3091. https://doi.org/10.1093/rfs/hhn080
  • Villalonga, B., Amit, R., Trujillo, M. A., & Guzman, A. (2015). Governance of family firms. Annual Review of Financial Economics, 7(1),...
  • Wooldridge, J. (2002). Econometric analysis of cross section and panel data. MIT Press.
  • Zwiebel, J. (1995). Corporate conservatism and relative compensation. The Journal of Political Economy, 103(1), 1–25