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Corporate board and board committee independence, firm performance, and family ownership concentration: An analysis based on Hong Kong firms

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  • Leung, Sidney
  • Richardson, Grant
  • Jaggi, Bikki

Abstract

This study examines whether the relationship between corporate board and board committee independence and firm performance is moderated by the concentration of family ownership. Based on a sample of Hong Kong firms, we find no significant association between the independence of corporate boards or board committees and firm performance in family firms, whereas board independence is positively associated with firm performance in non-family firms. Additionally, our findings show that the proportion of independent directors on the corporate boards of family firms is lower than that of non-family firms, but we find no significant difference in the representation of independent directors on the key committees of corporate boards between family and non-family firms. Overall, these results suggest that the “one size fits all” approach required by the regulatory authorities for appointing independent directors on corporate boards may not necessarily enhance firm performance, especially for family firms. Thus, the requirement to appoint independent directors to the corporate boards of family firms needs to be reconsidered.

Suggested Citation

  • Leung, Sidney & Richardson, Grant & Jaggi, Bikki, 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, Elsevier, vol. 10(1), pages 16-31.
    • Handle: RePEc:eee:jocaae:v:10:y:2014:i:1:p:16-31
    DOI: 10.1016/j.jcae.2013.11.002
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    10. Al-Hadi, Ahmed & Al-Yahyaee, Khamis Hamed & Hussain, Syed Mujahid & Taylor, Grantley, 2019. "Market risk disclosures and corporate governance structure: Evidence from GCC financial firms," The Quarterly Review of Economics and Finance, Elsevier, vol. 73(C), pages 136-150.
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    13. Alam, Nafis & Ramachandran, Jayalakshmy & Nahomy, Aisha Homy, 2020. "The impact of corporate governance and agency effect on earnings management – A test of the dual banking system," Research in International Business and Finance, Elsevier, vol. 54(C).
    14. Mohd Anas & Ishfaq Gulzar & Mosab I. Tabash & Gayas Ahmad & Wasi Yazdani & Md. Firoz Alam, 2023. "Investigating the Nexus between Corporate Governance and Firm Performance in India: Evidence from COVID-19," JRFM, MDPI, vol. 16(7), pages 1-18, June.
    15. Fitriya Fauzi & Abdul Basyith & Dani Foo, 2017. "Committee on board: Does it matter? A study of Indonesian Sharia-listed firms," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1316547-131, January.
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    17. Mohammad Rajon Meah & Kanon Kumar Sen & Md. Hossain Ali, 2021. "Audit Characteristics, Gender Diversity and Firm Performance: Evidence from a Developing Economy," Indian Journal of Corporate Governance, , vol. 14(1), pages 48-70, June.
    18. Milagros Gutiérrez-Fernández & Yakira Fernández-Torres, 2020. "Does Gender Diversity Influence Business Efficiency? An Analysis from the Social Perspective of CSR," Sustainability, MDPI, vol. 12(9), pages 1-18, May.
    19. Uribe-Bohorquez, María-Victoria & Martínez-Ferrero, Jennifer & García-Sánchez, Isabel-María, 2018. "Board independence and firm performance: The moderating effect of institutional context," Journal of Business Research, Elsevier, vol. 88(C), pages 28-43.
    20. Srinidhi, Bin & Liao, Qunfeng, 2020. "Family firms and crash risk: Alignment and entrenchment effects," Journal of Contemporary Accounting and Economics, Elsevier, vol. 16(2).
    21. Al-Okaily, Jihad & BenYoussef, Nourhene, 2020. "Audit committee effectiveness and non-audit service fees: Evidence from UK family firms," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 41(C).
    22. Abubakr Saeed & Qasim Ali & Hammad Riaz & Muhammad Asif Khan, 2022. "Audit Committee Independence and Auditor Reporting for Financially Distressed Companies: Evidence From an Emerging Economy," SAGE Open, , vol. 12(2), pages 21582440221, April.
    23. Eulaiwi, Baban & Al-Hadi, Ahmed & Taylor, Grantley & Al-Yahyaee, Khamis Hamed & Evans, John, 2016. "Multiple directorships, family ownership and the board nomination committee: International evidence from the GCC," Emerging Markets Review, Elsevier, vol. 28(C), pages 61-88.

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