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Monitor or Advise? How Family Involvement Affects Supervisory Board Roles in Family Firms

Dominik van Aaken (), Maximilian Göbel () and Daniel Meindl ()
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Dominik van Aaken: University of Salzburg
Maximilian Göbel: University of Salzburg
Daniel Meindl: Ludwig Maximilian University of Munich

Schmalenbach Business Review, 2020, vol. 72, issue 2, No 3, 193-224

Abstract: Abstract This paper examines how the involvement of family members in family firms affects the roles of supervisory boards in two-tier board systems. Taking an agency and resource-based perspective, we argue that the occurrence of monitoring and advisory tasks of the board depends on the entanglement of family management and family ownership. This entanglement creates special governance requirements for family firms in two-tier board systems. We use a unique dataset of 186 German family firm observations to show that family involvement in management as well as a high family ownership reduces the occurrence of the monitoring tasks that the supervisory board performs. Moreover, we show that a growing number of owning family branches increases the monitoring tasks. We also provide evidence that family involvement increases the occurrence of the advisory tasks in relation to the monitoring ones.

Keywords: Board roles; Board tasks; Family involvement; Family management; Family ownership; Supervisory board; Two tier board system (search for similar items in EconPapers)
JEL-codes: M10 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s41464-020-00088-w

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