BOARD COMPOSITION IN FAMILY BUSINESS AND PERFORMANCE IN GHANA: ROLE OF CEO DUALITY AND TYPE OF DIRECTORS
Abstract
Over decades now, studies on board compositions have been centered on well-structured market and institutions to the disadvantage of small and medium firms who are also drivers of growth. This paper therefore seeks to examine how non-listed private family owned firms’ performance are affected by certain board structural characteristics. Using hierarchical regression analysis with 319 firms in Ghana, on one hand the result reveals that a higher proportion of non-executive directors impacted negatively on the positive effect of CEO duality. On the other hand, we could not adduce any evidence to suggest that family firms’ board of directors’ diversity have influence on the impact of non-executive director’s effect on performance. We therefore proposed that growing non-listed family firms should lessen the use of non-executive directors when the CEO plays dual role in the firm. The study therefore provides empirical evidence that composition of board of privately owned family firms affect performance and further gives insight and credence to the need to influence the application of good corporate governance in such businesses and in a faction different from what has been suggested in general literature of board
Downloads
References
Bammens, Y., Voordeckers, W., Van Gils, A., (2008). Boards of directors in family firms: a generational perspective. Small Business Economics, 31(2): 163-180.
Bammens, Y., Voordeckers, W., Van Gils, A., (2011). Boards of directors in family businesses: a literature review and research agenda. International Journal of Management Review, 13: 134-152.
Bettinelli, C., 2011. Boards of directors in family firms: an exploratory study of structure and group process. Family Business Review, 24(2): 151-169.
Calabrò, A., Mussolino, D., 2011. How do boards of directors contribute to family SME export intensity? The role of for-mal and informal governance mechanisms. Journal of Management and Governance, 17: 363-403.
Cabrera-Suárez, K., Martín-Santana, D.J., (2015). Board composition and performance in Spanish non-listed family firms: The influence of type of directors and CEO duality, BRQ Business Research Quarterly, 18: 213-229.
Cabrera-Suárez, K., Santana-Martín, D.J., (2004). Governance in Spanish family business. International Journal Entrepreneurial Behavior Research, 10:141-163.
Dalton, D.R., Daily, C.M., Ellstrand, A.E., Johnson, J.L., (1998). Meta-analytic review of board composition, leadership structure, and financial performance, Strategic Management Journal, 19: 269-290.
Dalton, D.R., Dalton, C.M., (2011). Integration of micro and macro studies in governance research: CEO duality, board composition, and firm performance, Journal of Management, 37(2): 404-411.
Davis, J.H., Schoorman, F.D., Donaldson, L., (1997). Toward a stewardship theory of management. Academy of Management Review, 22(1): 20-47.
Djan, G. O., Zehou, S. and Bawuah, J., (2017). Board gender diversity and dividend policy in SMEs: moderating role of capital structure in emerging market, Journal of Research in Business, Economics & Management, 9(2):1667-1676.
Dyer Jr., G.D., (1986). Cultural Change in Family Firms. Jossey-Bass Publishers, San Francisco, CA.
Fama, E.F., Jensen, M.C., (1983). Separation of ownership and control, Journal of Law and Economics, 26(2): 301-325.
Frinpong S. & Kuutol P.K. (2017). Gender Diversity in Compensation Committees: The Factors and Implication on CEO Compensation, The International Journal of Business & Management, 5(3):110-117.
García-Ramos, R., García-Olalla, M., (2011). Board characteristics and firm performance in public founder- and non-founder-led family businesses, Journal of Family Business Strategy, 2:220-231.
Gersick, K.E., Davis, J.A., McCollom-Hampton, M., Lansberg, I., (1997). Generation to Generation: Life Cycles of the Family Business. Harvard Business School Press, Boston, MA.
Gomez-Mejia, L.R., Cruz, C., Berrone, P., de Castro, L., (2011). The bind that ties: socioemotional wealth preservation in family firms, The Academy of Management Annals, 5(1): 653-707.
Hoffman, J., Hoelscher, M., Sorenson, R., (2006). Achieving sustained competitive advantage: a family capital theory, Family Business Review, 19(2):135-145.
Klein, S.B., Astrachan, J.H., Smyrnios, K.X., (2005). The F-PEC scale of family influence: Construction, validation, and further implications for theory, Entrepreneurship Theory and Practice, 29(3): 321-339.
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.
de Kok, J.M.P., Uhlaner, L.M., Thurik, A.R., (2006) Professional HRM practices in family owned-managed enterprises, Journal of Small Business Management, 44(3): 441-460.
Lane, S., Astrachan, J., Keyt, A., McMillan, K., (2006). Guidelines for family business boards of directors. Family Business Review, 19(2): 147-167.
Le Breton-Miller, I., Miller, D., Lester, R.H., (2011). Stewardship or agency? A social embeddedness reconciliation of conduct and performance in public family businesses, Organization Science, 22(3): 704-721.
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 and Economics, 10(1): 16-31.
Maseda, A., Iturralde, T., Arosa, B., (2014). Impact of outsiders on firm performance over different generations of family-owned SMEs. Journal of Small Business Management, 53(4):1203-1218. http://dx.doi.org/10.1111/jsbm.12119.
Oswald, S.L., Muse, L.A., Rutherford, M.W., (2009). The influence of large stake family control on performance: is it agency or entrenchment? Journal of Small Business Management, 47(1): 116-135.
Prabowo, M., Simpson, J., (2011). Independent Directors and Firm Performance in Family Controlled Firms: Evidence from Indonesia. Crawford School of Economics and Government. The Australian National University and Blackwell Publishing Asia Pty Ltd., http://dx.doi.org/10.1111/j.1467-8411.2011.01276.x.
San Martin-Reyna, J.M., Duran-Encalada, J.A., (2012). The relation-ship among family business, corporate governance and firm performance: evidence from the Mexican stock, Journal of Family Business Strategy, 3(2): 106-117.
Zellweger, T.M., Eddleston, K.A., Kellermanns, F.W., (2010). Exploring the concept of familiness: introducing family firm identity, Journal Family Business Strategy, 1:54-63
TRANSFER OF COPYRIGHT
JRBEM is pleased to undertake the publication of your contribution to Journal of Research in Business Economics and Management.
The copyright to this article is transferred to JRBEM(including without limitation, the right to publish the work in whole or in part in any and all forms of media, now or hereafter known) effective if and when the article is accepted for publication thus granting JRBEM all rights for the work so that both parties may be protected from the consequences of unauthorized use.
