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Corporate Governance and Financial Performance: Family Firms vs. Non-Family Firms

Author

Listed:
  • Audney Mashele

    (Department of Accountancy, School of Accounting, College of Business and Economics, University of Johannesburg, Auckland Park Campus, Johannesburg 2092, South Africa)

  • Marise Mouton

    (Department of Commercial Accounting, School of Accounting, College of Business and Economics, University of Johannesburg, Soweto Campus, Johannesburg 1809, South Africa)

  • Lydia Pelcher

    (Department of Commercial Accounting, School of Accounting, College of Business and Economics, University of Johannesburg, Soweto Campus, Johannesburg 1809, South Africa)

Abstract

The essence of a family business captures the distinguishing factors differentiating them from non-family businesses. Among these factors, the constructs of family firms’ managing and governance elements are perceived differently by non-family firms. This is especially important in a developing country such as South Africa (SA) with many governance challenges. The objectives of this study were, first, to identify relationships among financial performance, corporate governance, and ownership concentrations of listed family and non-family businesses in SA. Next, a comparison was made between the different ownership structures. Secondary data were collected using purposive sampling from 2015 to 2019. These data were analysed using panel data analysis and descriptive statistics. The results show that family firms place a greater emphasis on ownership concentration, board size, and board gender diversity, which have a significant relationship with financial performance. Only board size was significant to financial performance for non-family firms. The results indicate that family businesses should appoint female family members as directors on their boards, given the significance of gender-diverse boards for financial performance. Non-family businesses should also consider having smaller boards. Theoretically, this study expands on the literature regarding family businesses in SA. However, the findings cannot be generalised due to a single industry being selected. This study should be replicated in different industries to compare the results.

Suggested Citation

  • Audney Mashele & Marise Mouton & Lydia Pelcher, 2024. "Corporate Governance and Financial Performance: Family Firms vs. Non-Family Firms," JRFM, MDPI, vol. 17(10), pages 1-18, October.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:10:p:444-:d:1490548
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    References listed on IDEAS

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    1. Shuping Chen & Xia Chen & Qiang Cheng, 2008. "Do Family Firms Provide More or Less Voluntary Disclosure?," Journal of Accounting Research, Wiley Blackwell, vol. 46(3), pages 499-536, June.
    2. Adhikari, Hari P. & Sutton, Ninon K., 2016. "All in the family: The effect of family ownership on acquisition performance," Journal of Economics and Business, Elsevier, vol. 88(C), pages 65-78.
    3. Gizelle Willows & Megan van der Linde, 2016. "Women representation on boards: a South African perspective," Meditari Accountancy Research, Emerald Group Publishing Limited, vol. 24(2), pages 211-225, June.
    4. Anderson, Ronald C & Reeb, David M, 2003. "Founding-Family Ownership, Corporate Diversification, and Firm Leverage," Journal of Law and Economics, University of Chicago Press, vol. 46(2), pages 653-684, October.
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    Cited by:

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