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Board of directors, dependency, and returns on investment
Jönköping University, Jönköping International Business School, JIBS, Economics.
(English)Manuscript (preprint) (Other academic)
Abstract [en]

This paper examines the relationship between board dependency, family control, and return on investments in Swedish listed firms. Board dependency is defined with regard to the principal owners (family and non-family owners), to the firm management, and to employees. The definition of dependency, as applied in the Swedish Code of Corporate Governance, together with good accessibility of detailed data on corporate governance variables, makes it possible to apply a precise measure of board dependency.

The analysis indicates that total board dependency has a significantly negative effect on returns on investment. The negative effect originates from the firm-related directors, whereas dependency on principal owners, families, and employees does not have any impact on firm performance.

Keyword [en]
Board dependency, family control, returns on investment, marginal q
National Category
Economics
Identifiers
URN: urn:nbn:se:hj:diva-31946OAI: oai:DiVA.org:hj-31946DiVA: diva2:1033527
Available from: 2016-10-07 Created: 2016-10-07 Last updated: 2016-10-07Bibliographically approved
In thesis
1. Family Ownership and Investment Performance
Open this publication in new window or tab >>Family Ownership and Investment Performance
2010 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This dissertation provides an economic analysis of families as owners of large listed firms. The essential research question is whether family ownership provides an efficient form of governance. Family ownership and control is evaluated from different angles; how ownership, control, management, and board structure affects firm performance, and executive compensation.

Chapter two “A Contractual Perspective of the Firm with an Application to the Maritime Industry” is a conceptual paper analyzing the contractual structure of a firm. The chapter conceptualizes the relations between firms, and markets, and gives a transaction cost perspective of why firms are organized the way they are.

The third chapter “The Impact of Vote Differentiation on Investment Performance in Listed Family Firms” investigates ownership and control in Swedish family controlled firms. The analysis shows that family control is beneficial, but only if voting rights and cash-flow rights are aligned.

The fourth chapter “Family Control and Executive Compensation” analyses whether families use remuneration as a way to expropriate minority shareholders. The study shows that managers in family-controlled firms have alower share of variable compensation than managers in non-family controlled firms. The analysis shows further that family control has a reducing effect on the total level of CEO-compensation.

The last chapter “Board of Directors, Dependency, and Returns on Investment” investigates if there is a relationship between ownership structure, board of directors, and firm performance. The marginal q analysis indicate that firm dependent directors have a negative impact on firms’ investment performance. Owner-dependent and employee elected directors do not affect firm investment performance.

To sum up, the empirical results show that family ownership and control affects remuneration in listed firms, and the firm investment performance. The analysis further shows that there are clear differences in the ownership and governance structure between family and non-family controlled firms.

Place, publisher, year, edition, pages
Jönköping: 2010, 2010. 38 p.
Series
JIBS Dissertation Series, ISSN 1403-0470 ; 066
National Category
Economics
Identifiers
urn:nbn:se:hj:diva-14518 (URN)9789186345143 (ISBN)
Public defence
2010-10-22, B1033, Gjuterigatan 5, Jönköping, 16:53 (English)
Opponent
Supervisors
Available from: 2011-02-10 Created: 2011-02-01 Last updated: 2016-10-07Bibliographically approved

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Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
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  • text
  • asciidoc
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