Family Firms and Compliance: Reconciling the Conflicting Predictions Within the Socioemotional Wealth Perspective. (June 2017)

• Record Type: Journal Article
• Authors: Kabbach de Castro, Luiz Ricardo; Aguilera, Ruth V.; Crespí-Cladera, Rafel
• Is Part Of: Family business review. Volume 30:Number 2(2017)
• Page Start: 137
• Page End: 159
• Publication Date: 2017-06
• Subjects: corporate governance codes -- socioemotional wealth -- ownership -- agency theory -- institutions; Family-owned business enterprises -- United States -- Periodicals; Home labor -- United States -- Periodicals; Small business -- United States -- Periodicals; New business enterprises -- United States -- Periodicals; 658.045
• DOI: 10.1177/0894486516685239
• Languages: English
• ISSNs: 0894-4865

Abstract

We draw on the socioemotional wealth perspective to examine the influence of family ownership on firms' noncompliance with corporate governance codes. Our results yield an inverted U-shaped effect of family ownership on noncompliance. While the family influence and control dimension leads to high levels of noncompliance, socioworthiness stemming from image and reputation dimension lessens noncompliance. In the presence of potential agency conflict, the control dimension prevails over reputation, even in countries with strong governance institutions. Our findings have critical implications for family business theory, for governance policy making and also for better understanding corporate governance in family firms.