 Diversity in Family Business: Where Social Goals Collide with Family Socioemotional WealthJijun Gao, Mingzhi Liu and Yefeng Wang Review of Corporate Finance, 2022, vol. 2, issue 4, 861-884 Abstract: Using a sample of 2,000 largest industrial firms in the U.S, we investigate how family involvement influences corporate diversity and whether a governance mechanism – dual-class share structure – moderates this effect. Contrary to typical socioemotional wealth (SEW) predictions, we argue that family firms will tend to engage less in diversity than nonfamily firms due to family firms’ desire to maintain family control and relatively lenient societal pressure on them. We also argue that the adoption of dual-class share arrangement exacerbates family dominance, thus strengthening the negative impact of family involvement on diversity. The results support our arguments and point out the boundary of SEW when involving issues of diversity. We find that family involvement decreases the level of overall diversity, by both engaging less diversity initiatives and causing more diversity-related concerns. Such negative relationship is more pronounced among family firms adopting a dual-class share structure where family owners gain greater control of business. These findings are very robust and provide important theoretical and policy implications. Keywords: Family involvement; dual-class share structure; diversity; socioemotional wealth; agency problem (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:now:jnlrcf:114.00000032 Access Statistics for this article More articles in Review of Corporate Finance from now publishers |
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