The Impact of Governance Structure on the Performance of Small Family and Nonfamily Firms: The Moderating Role of Firm Age

Vitaliy Skorodziyevskiy, Hanqing “Chevy†Fang, Esra Memili and James J. Chrisman

Review of Corporate Finance, 2022, vol. 2, issue 4, 721-743

Abstract: Drawing upon agency theory and the family business literature, we hypothesize that governance structure, the extent to which ownership and management are concentrated in the hands of a single individual or family, has an inverted U-shaped relationship with firm performance in small owner-managed firms. We further hypothesize that the inverted U-shaped relationship diminishes as firms age. Using a cross-sectional sample of 8,201 SBDC clients, we find support for an inverted U-shaped relationship between governance structure and firm performance. We also find that this relationship is moderated by firm age. Our findings have implications for the fields of finance and family business in terms of the concentration and separation of ownership and management in single and multi-family firms.

Keywords: Agency theory; family firm; family ownership; firm performance; firm age (search for similar items in EconPapers)
JEL-codes: D19 D21 D22 D82 G32 L25 L26 O51 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:now:jnlrcf:114.00000028

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