Corporate governance and profitability in family SMEs

Mats Hansson, Eva Liljeblom and Minna Martikainen

The European Journal of Finance, 2011, vol. 17, issue 5-6, 391-408

Abstract: We analyze the determinants of performance in small unlisted family firms and find, in line with previous studies, a positive effect associated with a family CEO. We contribute by bringing in an additional variable, the proportion of family members employed by the firm and find it to be negatively related to firm performance. There is a significant tendency for family CEOs to employ family members, which - given the negative effect of these - should offset some of the positive performance effects of a family CEO. We also analyze the effect of board size in these already small family boards, where the maximum number of board members is six. We find that even here, board size is significantly negatively associated with firm performance.

Keywords: firm performance; family employees; family CEO; board size; family SMEs (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:taf:eurjfi:v:17:y:2011:i:5-6:p:391-408

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DOI: 10.1080/1351847X.2010.543842

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