Governance and long-term operating performance of family and non-family firms in Australia
Abstract
Purpose
The purpose of this study is to conduct a comparative analysis of the long-term operating performance of family and non-family firms from the agency theoretic perspective. The analysis is focused on investigating the impact of family ownership on principal–agent conflicts of interest.
Design/methodology/approach
This paper examines the relationship between firm operating performance and family ownership for a large sample of 677 Australian-listed companies. The paper uses the Generalised Method of Moments (GMM) estimator model developed by Arellano and Bond (1991) and used by other studies in finance (Baltagi, 2012; Bond, 2002; Mohamed et al., 2008).
Findings
The empirical results show that firms with ownership concentration has a better operating performance due to the alignment of owner-management interests. This study also finds that family-listed companies have higher survival rates and perform better than non-family companies. Findings support the hypothesis that agency costs arise as a result of privileged access of information and self-interest behaviour of managers (outsiders) in firms with dispersed ownership structures.
Originality/value
Earlier studies have only focused on short-term perspectives, particularly investigating small and medium types of Australian family businesses from narrow aspects, such as productivity, business behaviour, capital structure and leverage. Therefore, this paper has conducted a comparative examination of family and non-family firms listed on the Australian Stock Exchange (ASX) to identify the impact of agency costs on their financial performance.
Keywords
Citation
Halili, E., Saleh, A.S. and Zeitun, R. (2015), "Governance and long-term operating performance of family and non-family firms in Australia", Studies in Economics and Finance, Vol. 32 No. 4, pp. 398-421. https://doi.org/10.1108/SEF-02-2014-0034
Publisher
:Emerald Group Publishing Limited
Copyright © 2015, Emerald Group Publishing Limited