Corporate Governance and Profitability in Family SMEs

30 Pages Posted: 7 Jan 2010

See all articles by Mats Hansson

Mats Hansson

Swedish School of Economics and Business Administration

Eva Liljeblom

Swedish School of Economics and Business Administration

Minna Martikainen

Hanken School of Economics

Date Written: December 14, 2009

Abstract

We analyze the determinants of performance in small unlisted family firms, and find, in line with previous studies, a positive effect associated with a family CEO. We contribute to previous literature by also analyzing the effect of board size in these already small family boards, where the maximum number of board members is 6. We find that even here, board size is significantly negatively associated with firm performance. We also bring in a novel variable, the proportion of family members employed by the firm, and find a negative effect especially for ROI . There is a significant tendence for family CEOs to employ more family members, which – given the negative effect of these – should take off some of the positive performance effects of a family CEOs.

Keywords: Board size, Family SMEs, Family CEO, Family employees, Firm performance

JEL Classification: G30, G32, G34

Suggested Citation

Hansson, Mats and Liljeblom, Eva and Martikainen, Minna, Corporate Governance and Profitability in Family SMEs (December 14, 2009). Available at SSRN: https://ssrn.com/abstract=1531638 or http://dx.doi.org/10.2139/ssrn.1531638

Mats Hansson

Swedish School of Economics and Business Administration ( email )

P.O. Box 479
FI-00101 Helsinki, 00101
Finland
+358-40-3521237 (Phone)
+358-9-43133393 (Fax)

Eva Liljeblom (Contact Author)

Swedish School of Economics and Business Administration ( email )

P.O. Box 479
FI-00101 Helsinki, 00101
Finland
+358-9-431 33 291 (Phone)
+358-9-431 33 393 (Fax)

Minna Martikainen

Hanken School of Economics ( email )

PoBox 479
Helsinki, 00100
Finland

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