Impact of family ownership on firm performance of family companies: The case of Viet Nam
Main Article Content
Abstract
The study assesses the impact of family ownership on the performance of family firms on the Vietnamese stock market by a linear relationship. The sample includes 230 observations collected over a 10-year period (2009-2019) of 23 family companies. By the GLS estimation method, the author uses the static multiple regression method on table data to evaluate the effect of family ownership on the performance of family firms. Research results provide an empirical evidence of the positive effect between family members' shareholding rates on company business performance. Besides, the study also shows a negative relationship between the proportion of family members participating in the Board of Directors and the Board of Directors, which is also a new discovery of the study. The research results have provided additional scientific bases for senior managers in family companies to have more perspectives on HR management in operating the company towards efficiency and sustainable development.
Article Details
Keywords
Family firms, Ownership of family firms, Corporate governance, ; Firms performance
References
Ali, A., Chen, T. Y., & Radhakrishnan, S. (2007). Corporate disclosures by family firms. Journal of accounting and economics, 44(1-2), 238-286.
Anderson, R. C., & Reeb, D. M. (2003). Founding‐family ownership and firm performance: evidence from the S&P 500. The journal of finance, 58(3), 1301-1328.
Andres, C. (2008). Large shareholders and firm performance—An empirical examination of founding-family ownership. Journal of corporate finance, 14(4), 431-445.
Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. The Review of Economic Studies, 58(2), 277–297.
Barontini, R., & Caprio, L. (2006). The effect of family control on firm value and performance: Evidence from continental Europe. European Financial Management, 12(5), 689-723
Bhattacharya, U., & Ravikumar, B. (2001). Capital markets and the evolution of family businesses. The Journal of Business, 74(2), 187-219.
Bushman, R. M., & Smith, A. J. (2001). Financial accounting information and corporate governance. Journal of accounting and Economics, 32(1-3), 237-333.
Basco, R. (2013). The family's effect on family firm performance: A model testing the demographic and essence approaches. Journal of Family Business Strategy, 4(1), 42-66.
Chu, W. (2009). The influence of family ownership on SME performance: evidence from public firms in Taiwan. Small Business Economics, 33(3), 353-373
Chu, W. (2011). Family ownership and firm performance: Influence of family management, family control, and firm size. Asia Pacific Journal of Management, 28(4), 833-851
Claessens, S., Djankov, S., & Lang, L. H. (2000). The separation of ownership and control in East Asian corporations. Journal of financial Economics, 58(1-2), 81-112.
Daily, C. M., Dalton, D. R., & Rajagopalan, N. (2003). Governance through ownership: Centuries of practice, decades of research. Academy of Management Journal, 46(2), 151-158
De Massis, A., Kotlar, J., Campopiano, G., & Cassia, L. (2013). Dispersion of family ownership and the performance of small-to-medium size private family firms. Journal of Family Business Strategy, 4(3), 166-175
Donaldson, L., & Davis, J. H. (1991). Stewardship theory or agency theory: CEO governance and shareholder returns. Australian Journal of management, 16(1), 49-64.
Faccio, M., & Lang, L. H. (2002). The ultimate ownership of Western European corporations. Journal of financial economics, 65(3), 365-395.
Fama, E. F., & Jensen, M. C. (1983). Agency problems and residual claims. The Journal of Law and Economics, 26(2), 327-349
Franks, J., & Mayer, C. (2001). Ownership and control of German corporations. The Review of Financial Studies, 14(4), 943-977.
Gadhoum, Y., Lang, L. H., & Young, L. (2005). Who controls US?. European Financial Management, 11(3), 339-363.
Gujarati, D. N. (2004). Basic Econometrics, the McGraw-HillCompanies. New York, NY, USA,.
Hermanson, H. M. (2000). An analysis of the demand for reporting on internal control. Accounting Horizons, 14(3), 325-341.
James, H. S. (1999). Owner as manager, extended horizons and the family firm. International journal of the economics of business, 6(1), 41-55
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of financial economics, 3(4), 305-360
King, M. R., & Santor, E. (2008). Family values: Ownership structure, performance and capital structure of Canadian firms. Journal of Banking & Finance, 32(11), 2423-2432.
Kowalewski, O., Talavera, O., & Stetsyuk, I. (2010). Influence of family involvement in management and ownership on firm performance: Evidence from Poland. Family Business Review, 23(1), 45-59.
Lam, K., Mok, H. M., Cheung, I., & Yam, H. C. (1994). Family groupings on performance of portfolio selection in the Hong Kong stock market. Journal of banking & finance, 18(4), 725-742.
Leung, S., Richardson, G., & Jaggi, B. (2014). Corporate board and board committee independence, firm performance, and family ownership concentration: An analysis based on Hong Kong firms. Journal of Contemporary Accounting & Economics, 10(1), 16-31.
Martínez, J. I., Stöhr, B. S., & Quiroga, B. F. (2007). Family ownership and firm performance: Evidence from public companies in Chile. Family Business Review, 20(2), 83-94.
Maury, B. (2006). Family ownership and firm performance: Empirical evidence from Western European corporations. Journal of Corporate Finance, 12(2), 321-341.
Miller, D., & Le Breton-Miller, I. (2006). Family governance and firm performance: Agency, stewardship, and capabilities. Family business review, 19(1), 73-87.
Miller, D., Le Breton-Miller, I., Lester, R. H., & Cannella Jr, A. A. (2007). Are family firms really superior performers?. Journal of Corporate Finance, 13(5), 829-858
Muth, M., & Donaldson, L. (1998). Stewardship theory and board structure: A contingency approach. Corporate Governance: An International Review, 6(1), 5-28.
Phung, D. N., & Hoang, T. P. T. (2013). Corporate ownership and firm performance in emerging market: a study of Vietnamese listed firms. In Proceedings of World Business and Social Science Research Conference, 24–25 October 2013, Hotel Novotel Bangkok on Siam Square, Bangkok, Thailand (1-16).
Phạm Quốc Việt (2010). Nghiên cứu ảnh hưởng của các nhân tố điều hành công ty đến hiệu quả hoạt động của công ty cổ phần: Luận án tiến sĩ (Doctoral dissertation, Trường Đại học Kinh tế Tp. Hồ Chí Minh).
Saito, T. (2008). Family firms and firm performance: Evidence from Japan. Journal of the Japanese and International Economies, 22(4), 620-646.
Sciascia, S., & Mazzola, P. (2008). Family involvement in ownership and management: Exploring nonlinear effects on performance. Family Business Review, 21(4), 331-345
Shyu, J. (2011). Family ownership and firm performance: evidence from Taiwanese firms. International Journal of Managerial Finance, 7(4), 397-411.
Sraer, D., & Thesmar, D. (2007). Performance and behavior of family firms: Evidence from the French stock market. Journal of the european economic Association, 5(4), 709-751.
Tran, T. M., & Duong, H. N. (2011). Managerial ownership and the performance of firms: Evidence from Vietnamese firm listed on HOSE. Science and Technology Development Journal, 14(2), 116-124.
Wild, J. J., Bernstein, L. A., Subramanyam, K. R., & Halsey, R. F. (2004). Financial statement analysis. McGraw-Hill.
Villalonga, B., & Amit, R. (2009). How are US family firms controlled?. Review of Financial Studies, 22(8), 3047-3091.
Wang, D. (2006). Founding family ownership and earnings quality. Journal of accounting research, 44(3), 619-656.
Anderson, R. C., & Reeb, D. M. (2003). Founding‐family ownership and firm performance: evidence from the S&P 500. The journal of finance, 58(3), 1301-1328.
Andres, C. (2008). Large shareholders and firm performance—An empirical examination of founding-family ownership. Journal of corporate finance, 14(4), 431-445.
Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. The Review of Economic Studies, 58(2), 277–297.
Barontini, R., & Caprio, L. (2006). The effect of family control on firm value and performance: Evidence from continental Europe. European Financial Management, 12(5), 689-723
Bhattacharya, U., & Ravikumar, B. (2001). Capital markets and the evolution of family businesses. The Journal of Business, 74(2), 187-219.
Bushman, R. M., & Smith, A. J. (2001). Financial accounting information and corporate governance. Journal of accounting and Economics, 32(1-3), 237-333.
Basco, R. (2013). The family's effect on family firm performance: A model testing the demographic and essence approaches. Journal of Family Business Strategy, 4(1), 42-66.
Chu, W. (2009). The influence of family ownership on SME performance: evidence from public firms in Taiwan. Small Business Economics, 33(3), 353-373
Chu, W. (2011). Family ownership and firm performance: Influence of family management, family control, and firm size. Asia Pacific Journal of Management, 28(4), 833-851
Claessens, S., Djankov, S., & Lang, L. H. (2000). The separation of ownership and control in East Asian corporations. Journal of financial Economics, 58(1-2), 81-112.
Daily, C. M., Dalton, D. R., & Rajagopalan, N. (2003). Governance through ownership: Centuries of practice, decades of research. Academy of Management Journal, 46(2), 151-158
De Massis, A., Kotlar, J., Campopiano, G., & Cassia, L. (2013). Dispersion of family ownership and the performance of small-to-medium size private family firms. Journal of Family Business Strategy, 4(3), 166-175
Donaldson, L., & Davis, J. H. (1991). Stewardship theory or agency theory: CEO governance and shareholder returns. Australian Journal of management, 16(1), 49-64.
Faccio, M., & Lang, L. H. (2002). The ultimate ownership of Western European corporations. Journal of financial economics, 65(3), 365-395.
Fama, E. F., & Jensen, M. C. (1983). Agency problems and residual claims. The Journal of Law and Economics, 26(2), 327-349
Franks, J., & Mayer, C. (2001). Ownership and control of German corporations. The Review of Financial Studies, 14(4), 943-977.
Gadhoum, Y., Lang, L. H., & Young, L. (2005). Who controls US?. European Financial Management, 11(3), 339-363.
Gujarati, D. N. (2004). Basic Econometrics, the McGraw-HillCompanies. New York, NY, USA,.
Hermanson, H. M. (2000). An analysis of the demand for reporting on internal control. Accounting Horizons, 14(3), 325-341.
James, H. S. (1999). Owner as manager, extended horizons and the family firm. International journal of the economics of business, 6(1), 41-55
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of financial economics, 3(4), 305-360
King, M. R., & Santor, E. (2008). Family values: Ownership structure, performance and capital structure of Canadian firms. Journal of Banking & Finance, 32(11), 2423-2432.
Kowalewski, O., Talavera, O., & Stetsyuk, I. (2010). Influence of family involvement in management and ownership on firm performance: Evidence from Poland. Family Business Review, 23(1), 45-59.
Lam, K., Mok, H. M., Cheung, I., & Yam, H. C. (1994). Family groupings on performance of portfolio selection in the Hong Kong stock market. Journal of banking & finance, 18(4), 725-742.
Leung, S., Richardson, G., & Jaggi, B. (2014). Corporate board and board committee independence, firm performance, and family ownership concentration: An analysis based on Hong Kong firms. Journal of Contemporary Accounting & Economics, 10(1), 16-31.
Martínez, J. I., Stöhr, B. S., & Quiroga, B. F. (2007). Family ownership and firm performance: Evidence from public companies in Chile. Family Business Review, 20(2), 83-94.
Maury, B. (2006). Family ownership and firm performance: Empirical evidence from Western European corporations. Journal of Corporate Finance, 12(2), 321-341.
Miller, D., & Le Breton-Miller, I. (2006). Family governance and firm performance: Agency, stewardship, and capabilities. Family business review, 19(1), 73-87.
Miller, D., Le Breton-Miller, I., Lester, R. H., & Cannella Jr, A. A. (2007). Are family firms really superior performers?. Journal of Corporate Finance, 13(5), 829-858
Muth, M., & Donaldson, L. (1998). Stewardship theory and board structure: A contingency approach. Corporate Governance: An International Review, 6(1), 5-28.
Phung, D. N., & Hoang, T. P. T. (2013). Corporate ownership and firm performance in emerging market: a study of Vietnamese listed firms. In Proceedings of World Business and Social Science Research Conference, 24–25 October 2013, Hotel Novotel Bangkok on Siam Square, Bangkok, Thailand (1-16).
Phạm Quốc Việt (2010). Nghiên cứu ảnh hưởng của các nhân tố điều hành công ty đến hiệu quả hoạt động của công ty cổ phần: Luận án tiến sĩ (Doctoral dissertation, Trường Đại học Kinh tế Tp. Hồ Chí Minh).
Saito, T. (2008). Family firms and firm performance: Evidence from Japan. Journal of the Japanese and International Economies, 22(4), 620-646.
Sciascia, S., & Mazzola, P. (2008). Family involvement in ownership and management: Exploring nonlinear effects on performance. Family Business Review, 21(4), 331-345
Shyu, J. (2011). Family ownership and firm performance: evidence from Taiwanese firms. International Journal of Managerial Finance, 7(4), 397-411.
Sraer, D., & Thesmar, D. (2007). Performance and behavior of family firms: Evidence from the French stock market. Journal of the european economic Association, 5(4), 709-751.
Tran, T. M., & Duong, H. N. (2011). Managerial ownership and the performance of firms: Evidence from Vietnamese firm listed on HOSE. Science and Technology Development Journal, 14(2), 116-124.
Wild, J. J., Bernstein, L. A., Subramanyam, K. R., & Halsey, R. F. (2004). Financial statement analysis. McGraw-Hill.
Villalonga, B., & Amit, R. (2009). How are US family firms controlled?. Review of Financial Studies, 22(8), 3047-3091.
Wang, D. (2006). Founding family ownership and earnings quality. Journal of accounting research, 44(3), 619-656.
Most read articles by the same author(s)
- Phan Thi Huong, Cao Tan Huy, The relationship between diversification, risk and return of Vietnamese commercial banks: Approach from PVAR model , Journal of Finance and Marketing: Vol. 14, issue 1