Family representatives in family firms

Chen, En-Te, Gray, Stephen and Nowland, John (2013) Family representatives in family firms. Corporate Governance, 21 3: 242-263. doi:10.1111/corg.12009

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Author Chen, En-Te
Gray, Stephen
Nowland, John
Title Family representatives in family firms
Journal name Corporate Governance   Check publisher's open access policy
ISSN 0964-8410
Publication date 2013-05
Year available 2012
Sub-type Article (original research)
DOI 10.1111/corg.12009
Open Access Status
Volume 21
Issue 3
Start page 242
End page 263
Total pages 22
Place of publication Chichester, West Sussex, United Kingdom
Publisher Wiley-Blackwell Publishing Ltd.
Collection year 2014
Language eng
Formatted abstract
Manuscript Type: Empirical Research Question/Issue: Family control in family firms can extend beyond the direct involvement of family members, but identifying these mechanisms is difficult in most markets. We utilize unique disclosures made by Taiwanese firms to examine the role played by family representatives in listed family firms. Family representatives are non-family members that represent the controlling family's indirect shareholdings in the firm. We examine whether family representatives are used in the same manner as family members and whether they provide net benefits or costs to shareholders. Research Findings/Insights: In our sample of listed family firms, we find that omitting family representatives understates the influence of controlling families by 46 percent. We show that family representatives are associated with net costs to shareholders, but to a lesser extent than family members. We also find that controlling families use family members and family representatives differently. Family members are more involved in older family firms and in firms founded by the family. Family representatives are more involved in acquired and second generation family firms and in larger firms with more fixed assets. Theoretical/Academic Implications: We apply agency theory to the use of family representatives and show that family representatives are being used by controlling families to extend their influence within their firms, increasing agency costs to minority shareholders. Practitioner/Policy Implications: For policymakers, our analysis shows that disclosure of family member and representative relationships within firms is important and value-relevant to investors. Furthermore, our results suggest that firm performance could be improved by limiting the involvement of family members and family representatives in family firms.
Keyword Corporate Governance
Family Firms
Family Members
Family Representatives
Firm Performance
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2014 Collection
UQ Business School Publications
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Citation counts: TR Web of Science Citation Count  Cited 5 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 10 times in Scopus Article | Citations
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Created: Sun, 26 May 2013, 00:36:02 EST by System User on behalf of UQ Business School