Dual Agency Problems in Family Firms: Evidence from Director Elections

51 Pages Posted: 18 Mar 2020

See all articles by Rasha Ashraf

Rasha Ashraf

Georgia State University - Department of Finance

Huimin Li

University of New Hampshire - Department of Accounting & Finance

Harley E. Ryan

Georgia State University - Department of Finance

Date Written: September 20, 2019

Abstract

We use director elections to analyze outsider shareholder perspectives of agency problems in family firms. Compared to nonfamily firms, outsider shareholders in family firms provide weaker support for director slates proposed by the firms’ nominating committees. Outside shareholder support decreases when families receive private benefits of control, when family members serve in leadership roles, or when family members serve on board monitoring committees. We do not find similar results for other actively engaged concentrated owners. Our results provide new insights into outsider shareholders’ satisfaction with family control in publicly held firms and their perceptions of the family-outsider agency conflicts.

Keywords: Director Elections, Family Firms, Governance

JEL Classification: G30; G34

Suggested Citation

Ashraf, Rasha and Li, Huimin and Ryan, Harley E., Dual Agency Problems in Family Firms: Evidence from Director Elections (September 20, 2019). Journal of Corporate Finance, Vol. 62, 2020, Available at SSRN: https://ssrn.com/abstract=3541150

Rasha Ashraf

Georgia State University - Department of Finance ( email )

35 Broad Street
Suite 1238
Atlanta, GA 30303
United States
404-413-7348 (Phone)
404-894-6030 (Fax)

Huimin Li

University of New Hampshire - Department of Accounting & Finance ( email )

Durham, NH 03824
United States

Harley E. Ryan (Contact Author)

Georgia State University - Department of Finance ( email )

University Plaza
35 Broad Street, Suite 1221
Atlanta, GA 30303-3083
United States
404-651-2674 (Phone)
404-651-2630 (Fax)

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