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Controlling shareholders and the composition of the board: special focus on family firms

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  • Isabel Acero

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  • Nuria Alcalde

    ()

Abstract

This article analyses the relevance of the agency problems that exist between shareholders and managers (type I agency problems) and between majority and minority shareholders (type II agency problems), in determining the composition of the board of directors, differentiating between family owned and non-family owned firms. The hypotheses are tested on a sample of 173 Spanish listed companies for the period 2004–2011. The results of our study indicate that, on one hand, as type I agency problems increase, firms increase their percentage of outside directors and, on the other, as type II agency problems increase, firms increase the ratio of independent to nominee directors. Whether the company is a family firm or not does moderate the influence of insider ownership over the composition of the board. Generally speaking, our findings support the view that firms configure their board of directors in such a way as to best signal to the market both efficient management and a balance of the interests of all shareholders. Likewise, these results could be taken into account when formulating recommendations on the composition of the board of directors. Copyright Springer-Verlag Berlin Heidelberg 2016

Suggested Citation

  • Isabel Acero & Nuria Alcalde, 2016. "Controlling shareholders and the composition of the board: special focus on family firms," Review of Managerial Science, Springer, vol. 10(1), pages 61-83, January.
  • Handle: RePEc:spr:rvmgts:v:10:y:2016:i:1:p:61-83
    DOI: 10.1007/s11846-014-0140-x
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    References listed on IDEAS

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    1. repec:eee:fambus:v:8:y:2017:i:4:p:237-247 is not listed on IDEAS

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    Keywords

    Ownership concentration; Board of directors; Family firms; Agency problems in family firms; Expropriation risks in family firms; G32; G34;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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