Do standard corporate governance practices matter in family firms?

Sridhar Arcot and Valentina Bruno

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We study the unique governance dynamics surrounding family ownership in a voluntary regulatory arena where we can directly observe the impact of firm ownership on corporate governance practices pertaining to the composition of the board of directors. We find that family firms are more likely to deviate from standards of best practice in corporate governance. However, lesser governance standards in family firms are not associated with lower performance because the family shareholder is the monitor in-place. In contrast, governance practices and disclosures matter in widely-held firms because they alleviate the conflicts between managers and dispersed shareholders. More broadly, our results show that family ownership and board governance practices are substitute governance mechanisms.

JEL-codes: G32 G34 G38 K22 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2012-09-01
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http://eprints.lse.ac.uk/119043/ Open access version. (application/pdf)

Related works:
Working Paper: Do Standard Corporate Governance Practices Matter in Family Firms? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:119043

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