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Institutions Behind Family Ownership and Control in Large Firms

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  • Mike W. Peng
  • Yi Jiang
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    Abstract

    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 value. Why are there such differences? We theorize that the impact of family ownership and control on firm value is associated with the level of shareholder protection embodied in legal and regulatory institutions of a country. Data from 634 publicly listed large family firms in seven Asian countries (Hong Kong, Indonesia, Malaysia, Singapore, South Korea, Taiwan, and Thailand) are used to test our hypotheses. Overall, this article sketches the contours of a cross-country, institution-based view of corporate governance, and leads to a more informed understanding of the crucial role of institutions behind family ownership and control in large firms. Copyright (c) 2009 The Authors. Journal compilation (c) 2009 Blackwell Publishing Ltd and Society for the Advancement of Management Studies.

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Journal of Management Studies.

    Volume (Year): 47 (2010)
    Issue (Month): 2 (03)
    Pages: 253-273

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    Handle: RePEc:bla:jomstd:v:47:y:2010:i:2:p:253-273

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    Cited by:
    1. Hsi-Mei Chung & Shu-Ting Chan, 2012. "Ownership structure, family leadership, and performance of affiliate firms in large family business groups," Asia Pacific Journal of Management, Springer, Springer, vol. 29(2), pages 303-329, June.
    2. Martin Wielemaker & Eric Gedajlovic, 2011. "Governance and capabilities: Asia’s entrepreneurial performance and stock of venture forms," Asia Pacific Journal of Management, Springer, Springer, vol. 28(1), pages 157-185, March.
    3. Yi Jiang & Mike Peng, 2011. "Principal-principal conflicts during crisis," Asia Pacific Journal of Management, Springer, Springer, vol. 28(4), pages 683-695, December.
    4. Xiaoxiang Zhang & Jo-Ting Wei & Hsin-Hung Wu, 2013. "Forced financial information restatements and management turnover: Market discipline and large family shareholders’ intervention in an emerging economy," Asia Pacific Journal of Management, Springer, Springer, vol. 30(4), pages 1005-1029, December.
    5. Audretsch, David B. & Hülsbeck, Marcel & Lehmann, Erik E., 2013. "Families as active monitors of firm performance," Journal of Family Business Strategy, Elsevier, vol. 4(2), pages 118-130.
    6. Ruey-Dang Chang & Jo-Ting Wei, 2011. "Effects of governance on investment decisions and perceptions of reporting credibility: Investment experience of Taiwanese individual investors," Asia Pacific Journal of Management, Springer, Springer, vol. 28(1), pages 139-155, March.
    7. Igor Filatotchev & Xiaoxiang Zhang & Jenifer Piesse, 2011. "Multiple agency perspective, family control, and private information abuse in an emerging economy," Asia Pacific Journal of Management, Springer, Springer, vol. 28(1), pages 69-93, March.
    8. Yi Jiang & Mike Peng, 2011. "Are family ownership and control in large firms good, bad, or irrelevant?," Asia Pacific Journal of Management, Springer, Springer, vol. 28(1), pages 15-39, March.
    9. Audretsch, David B. & Hülsbeck, Marcel & Lehmann, Erik E., 2010. "The benefits of family ownership, control and management on financial performance of firms," UO Working Papers 05-10, University of Augsburg, Chair of Management and Organization.
    10. Steve Sauerwald & Mike Peng, 2013. "Informal institutions, shareholder coalitions, and principal–principal conflicts," Asia Pacific Journal of Management, Springer, Springer, vol. 30(3), pages 853-870, September.
    11. Basco, Rodrigo, 2013. "The family's effect on family firm performance: A model testing the demographic and essence approaches," Journal of Family Business Strategy, Elsevier, vol. 4(1), pages 42-66.
    12. Steven Globerman & Mike Peng & Daniel Shapiro, 2011. "Corporate governance and Asian companies," Asia Pacific Journal of Management, Springer, Springer, vol. 28(1), pages 1-14, March.
    13. Weiping Liu & Haibin Yang & Guangxi Zhang, 2012. "Does family business excel in firm performance? An institution-based view," Asia Pacific Journal of Management, Springer, Springer, vol. 29(4), pages 965-987, December.
    14. Weichieh Su & Cheng-Yu Lee, 2013. "Effects of corporate governance on risk taking in Taiwanese family firms during institutional reform," Asia Pacific Journal of Management, Springer, Springer, vol. 30(3), pages 809-828, September.
    15. Michael Young & Terence Tsai & Xinran Wang & Shubo Liu & David Ahlstrom, 2014. "Strategy in emerging economies and the theory of the firm," Asia Pacific Journal of Management, Springer, Springer, vol. 31(2), pages 331-354, June.
    16. Carney, Richard W. & Child, Travers Barclay, 2013. "Changes to the ownership and control of East Asian corporations between 1996 and 2008: The primacy of politics," Journal of Financial Economics, Elsevier, Elsevier, vol. 107(2), pages 494-513.
    17. Autore, Don M. & Boulton, Thomas J. & Smart, Scott B. & Zutter, Chad J., 2014. "The impact of institutional quality on initial public offerings," Journal of Economics and Business, Elsevier, Elsevier, vol. 73(C), pages 65-96.
    18. Di Cai & Jin-hui Luo & Di-fang Wan, 2012. "Family CEOs: Do they benefit firm performance in China?," Asia Pacific Journal of Management, Springer, Springer, vol. 29(4), pages 923-947, December.
    19. Victor Chen & Jing Li & Daniel Shapiro, 2011. "Are OECD-prescribed “good corporate governance practices” really good in an emerging economy?," Asia Pacific Journal of Management, Springer, Springer, vol. 28(1), pages 115-138, March.
    20. Gugler, Klaus & Ivanova, Natalia & Zechner, Josef, 2014. "Ownership and control in Central and Eastern Europe," Journal of Corporate Finance, Elsevier, Elsevier, vol. 26(C), pages 145-163.
    21. Jin-hui Luo & Di-fang Wan & Di Cai, 2012. "The private benefits of control in Chinese listed firms: Do cash flow rights always reduce controlling shareholders’ tunneling?," Asia Pacific Journal of Management, Springer, Springer, vol. 29(2), pages 499-518, June.

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