IDEAS home Printed from https://ideas.repec.org/a/spr/eurasi/v12y2022i4d10.1007_s40821-021-00197-7.html
   My bibliography  Save this article

Non-linearity between family control and firm financial sustainability: moderating effects of CEO tenure and education

Author

Listed:
  • Norazlin Ahmad

    (Universiti Malaysia Pahang)

  • Irene Wei Kiong Ting

    (Universiti Malaysia Pahang)

  • Imen Tebourbi

    (Canadian University Dubai)

  • Qian Long Kweh

    (Canadian University Dubai)

Abstract

We investigate the non-linearity between family control and firm financial sustainability and the manner in which CEO tenure and education moderate the non-linear relationship. We apply fixed-effects panel regression and several alternative tests, including two-stage least squares, in studying 2844 firm-year observations of Malaysian publicly listed firms during the period 2009–2019. We find a non-linear U-shaped relationship between family control and firm financial sustainability. Specifically, once levels of family control exceed a certain threshold, the relationship between family control and firm financial sustainability becomes positive. Moreover, CEO tenure and education moderate this non-linearity. That is, when family control is at a low (high) level, both moderators lessen (increase) the negative (positive) effects of family control on firm financial sustainability.

Suggested Citation

  • Norazlin Ahmad & Irene Wei Kiong Ting & Imen Tebourbi & Qian Long Kweh, 2022. "Non-linearity between family control and firm financial sustainability: moderating effects of CEO tenure and education," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(4), pages 719-741, December.
    • Handle: RePEc:spr:eurasi:v:12:y:2022:i:4:d:10.1007_s40821-021-00197-7
    DOI: 10.1007/s40821-021-00197-7
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s40821-021-00197-7
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s40821-021-00197-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Steier, Lloyd, 2003. "Variants of agency contracts in family-financed ventures as a continuum of familial altruistic and market rationalities," Journal of Business Venturing, Elsevier, vol. 18(5), pages 597-618, September.
    2. Kimberly A. Eddleston & Peter Jaskiewicz & Mike Wright, 2020. "Family firms and internationalization in the Asia-Pacific: the need for multi-level perspectives," Asia Pacific Journal of Management, Springer, vol. 37(2), pages 345-361, June.
    3. Gundula Glowka & Andreas Kallmünzer & Anita Zehrer, 2021. "Enterprise risk management in small and medium family enterprises: the role of family involvement and CEO tenure," International Entrepreneurship and Management Journal, Springer, vol. 17(3), pages 1213-1231, September.
    4. Aguilera, Ruth V. & Crespi-Cladera, Rafel, 2012. "Firm family firms: Current debates of corporate governance in family firms," Journal of Family Business Strategy, Elsevier, vol. 3(2), pages 66-69.
    5. Nyankomo Marwa & Meshach Aziakpono, 2015. "Financial sustainability of Tanzanian saving and credit cooperatives," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 42(10), pages 870-887, October.
    6. Aldrich, Howard E. & Cliff, Jennifer E., 2003. "The pervasive effects of family on entrepreneurship: toward a family embeddedness perspective," Journal of Business Venturing, Elsevier, vol. 18(5), pages 573-596, September.
    7. Felipe Hernández-Perlines & Manuel Alejandro Ibarra Cisneros, 2018. "The Role of Environment in Sustainable Entrepreneurial Orientation. The Case of Family Firms," Sustainability, MDPI, vol. 10(6), pages 1-16, June.
    8. Noor Afza Amran & Ayoib Che Ahmad, 2009. "Family Business, Board Dynamics and Firm Value: Evidence from Malaysia," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 7(1), pages 53-74, December.
    9. Irene Wei Kiong Ting & Hooi Hooi Lean & Qian Long Kweh & Noor Azlinna Azizan, 2016. "Managerial overconfidence, government intervention and corporate financing decision," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 12(1), pages 4-24, February.
    10. Feng Wei & Jiawei Lu & Yu Kong, 2017. "Research on Sustainability Financial Performance of Chinese Listed Companies," Sustainability, MDPI, vol. 9(5), pages 1-17, April.
    11. repec:bla:jfinan:v:58:y:2003:i:3:p:1301-1327 is not listed on IDEAS
    12. El Ghoul, Sadok & Guedhami, Omrane & Wang, He & Kwok, Chuck C.Y., 2016. "Family control and corporate social responsibility," Journal of Banking & Finance, Elsevier, vol. 73(C), pages 131-146.
    13. Claessens, Stijn & Djankov, Simeon & Lang, Larry H. P., 2000. "The separation of ownership and control in East Asian Corporations," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 81-112.
    14. Jing Zhao & Michael Carney & Shubo Zhang & Limin Zhu, 2020. "How does an intra-family succession effect strategic change and performance in China’s family firms?," Asia Pacific Journal of Management, Springer, vol. 37(2), pages 363-389, June.
    15. Jonathan Bauweraerts, 2020. "The Effect of CEO Attributes on the Internationalization-Performance Relationship in Private Family Firms," Studies on Entrepreneurship, Structural Change and Industrial Dynamics, in: José Manuel Saiz-Álvarez & João Leitão & Jesús Manuel Palma-Ruiz (ed.), Entrepreneurship and Family Business Vitality, pages 233-253, Springer.
    16. Chen, Yi-Min & Liu, Hsin-Hsien & Yang, Yung-Kai & Chen, Wei-Hua, 2016. "CEO succession in family firms: Stewardship perspective in the pre-succession context," Journal of Business Research, Elsevier, vol. 69(11), pages 5111-5116.
    17. Maoyong Zheng & Cesar L. Escalante, 2020. "Banks' sustainable growth challenge under economic recessionary pressure," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 80(3), pages 437-451, February.
    18. Morck, Randall & Shleifer, Andrei & Vishny, Robert W., 1988. "Management ownership and market valuation," Scholarly Articles 29407535, Harvard University Department of Economics.
    19. James H. Davis & Mathew R. Allen & H. David Hayes, 2010. "Is Blood Thicker Than Water? A Study of Stewardship Perceptions in Family Business," Entrepreneurship Theory and Practice, , vol. 34(6), pages 1093-1116, November.
    20. Breton-Miller, Isabelle Le & Miller, Danny, 2016. "Family firms and practices of sustainability: A contingency view," Journal of Family Business Strategy, Elsevier, vol. 7(1), pages 26-33.
    21. Deborah de Lange & Timo Busch & Javier Delgado-Ceballos, 2012. "Sustaining Sustainability in Organizations," Journal of Business Ethics, Springer, vol. 110(2), pages 151-156, October.
    22. Carlos de las Heras-Rosas & Juan Herrera, 2020. "Family Firms and Sustainability. A Longitudinal Analysis," Sustainability, MDPI, vol. 12(13), pages 1-27, July.
    23. Shaker A. Zahra & James C. Hayton & Donald O. Neubaum & Clay Dibrell & Justin Craig, 2008. "Culture of Family Commitment and Strategic Flexibility: The Moderating Effect of Stewardship," Entrepreneurship Theory and Practice, , vol. 32(6), pages 1035-1054, November.
    24. Morck, Randall & Shleifer, Andrei & Vishny, Robert W., 1988. "Management ownership and market valuation : An empirical analysis," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 293-315, January.
    25. Dou, Junsheng & Jacoby, Gady & Li, Jialong & Su, Youyi & Wu, Zhenyu, 2019. "Family involvement and family firm internationalization: The moderating effects of board experience and geographical distance," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 59(C), pages 250-261.
    26. Tine Buyl & Christophe Boone & Walter Hendriks & Paul Matthyssens, 2011. "Top Management Team Functional Diversity and Firm Performance: The Moderating Role of CEO Characteristics," Journal of Management Studies, Wiley Blackwell, vol. 48(1), pages 151-177, January.
    27. Wang, Kun Tracy & Shailer, Greg, 2017. "Family ownership and financial performance relations in emerging markets," International Review of Economics & Finance, Elsevier, vol. 51(C), pages 82-98.
    28. Cain, Matthew D. & McKeon, Stephen B., 2016. "CEO Personal Risk-Taking and Corporate Policies," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 51(1), pages 139-164, February.
    29. J. Ruben Boling & Torsten M. Pieper & Jeffrey G. Covin, 2016. "CEO Tenure and Entrepreneurial Orientation within Family and Nonfamily Firms," Entrepreneurship Theory and Practice, , vol. 40(4), pages 891-913, July.
    30. Manuel Castelo Branco & Catarina Delgado & Sónia Ferreira Gomes & Teresa Cristina Pereira Eugénio, 2014. "Factors influencing the assurance of sustainability reports in the context of the economic crisis in Portugal," Managerial Auditing Journal, Emerald Group Publishing, vol. 29(3), pages 237-252, February.
    31. Ronald C. Anderson & David M. Reeb, 2003. "Founding‐Family Ownership and Firm Performance: Evidence from the S&P 500," Journal of Finance, American Finance Association, vol. 58(3), pages 1301-1328, June.
    32. Mishari M. Alfraih, 2016. "The effectiveness of board of directors’ characteristics in mandatory disclosure compliance," Journal of Financial Regulation and Compliance, Emerald Group Publishing Limited, vol. 24(2), pages 154-176, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fang-Chen Kao & Irene Wei Kiong Ting & Han-Chung Chou & Yi-Sung Liu, 2022. "Exploring the Influence of Corporate Social Responsibility on Efficiency: An Extended Dynamic Data Envelopment Analysis of the Global Airline Industry," Sustainability, MDPI, vol. 14(19), pages 1-21, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Suveera Gill & Parmjit Kaur, 2015. "Family Involvement in Business and Financial Performance: A Panel Data Analysis," Vikalpa: The Journal for Decision Makers, , vol. 40(4), pages 395-420, December.
    2. Kihun Kim & Zulfiquer Ali Haider & Zhenyu Wu & Junsheng Dou, 2020. "Corporate Social Performance of Family Firms: A Place-Based Perspective in the Context of Layoffs," Journal of Business Ethics, Springer, vol. 167(2), pages 235-252, November.
    3. San Martin-Reyna, J.M. & Duran-Encalada, Jorge A., 2012. "The relationship among family business, corporate governance and firm performance: Evidence from the Mexican stock exchange," Journal of Family Business Strategy, Elsevier, vol. 3(2), pages 106-117.
    4. Purkayastha, Saptarshi & Veliyath, Rajaram & George, Rejie, 2019. "The roles of family ownership and family management in the governance of agency conflicts," Journal of Business Research, Elsevier, vol. 98(C), pages 50-64.
    5. He Soung Ahn & EuiBeom Jeong & Hyejin Cho, 2020. "Toward an Understanding of Family Business Sustainability: A Network-Based Systematic Review," Sustainability, MDPI, vol. 13(1), pages 1-15, December.
    6. Rantanen, Noora & Jussila, Iiro, 2011. "F-CPO: A collective psychological ownership approach to capturing realized family influence on business," Journal of Family Business Strategy, Elsevier, vol. 2(3), pages 139-150.
    7. Christopher Hansen & Joern Block & Matthias Neuenkirch, 2020. "Family Firm Performance Over The Business Cycle: A Meta‐Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 34(3), pages 476-511, July.
    8. James J. Chrisman & Jess H. Chua & Pramodita Sharma, 2005. "Trends and Directions in the Development of a Strategic Management Theory of the Family Firm," Entrepreneurship Theory and Practice, , vol. 29(5), pages 555-575, September.
    9. Priya Dhamija Gupta & Sonali Bhattacharya, 2016. "Impact of Knowledge Management Processes for Sustainability of Small Family Businesses: Evidences from the Brassware Sector of Moradabad (India)," Journal of Information & Knowledge Management (JIKM), World Scientific Publishing Co. Pte. Ltd., vol. 15(04), pages 1-46, December.
    10. Arz, Christopher, 2019. "Bridging the micro-macro gap: A multi-layer culture framework for understanding entrepreneurial orientation in family firms," Journal of Family Business Strategy, Elsevier, vol. 10(3), pages 1-1.
    11. Lo, Huai-Chun & Ting, Irene Wei Kiong & Kweh, Qian Long & Yang, Ming Jing, 2016. "Nonlinear association between ownership concentration and leverage: The role of family control," International Review of Financial Analysis, Elsevier, vol. 46(C), pages 113-123.
    12. Kyuho Jin & Joowon Lee & Sung Min Hong, 2021. "The Dark Side of Managing for the Long Run: Examining When Family Firms Create Value," Sustainability, MDPI, vol. 13(7), pages 1-20, March.
    13. Ding, Wenzhi & Levine, Ross & Lin, Chen & Xie, Wensi, 2021. "Corporate immunity to the COVID-19 pandemic," Journal of Financial Economics, Elsevier, vol. 141(2), pages 802-830.
    14. Bouzgarrou, Houssam & Navatte, Patrick, 2013. "Ownership structure and acquirers performance: Family vs. non-family firms," International Review of Financial Analysis, Elsevier, vol. 27(C), pages 123-134.
    15. Bennedsen, Morten & Nielsen, Kasper & Pérez-González, Francisco & Wolfenzon, Daniel, 2005. "Inside the Family Firm," Working Papers 21-2005, Copenhagen Business School, Department of Economics.
    16. Ju-Fang Yen & Chih-Yung Lin & Yan-Shing Chen & Ying-Chen Huang, 2015. "Founding Family Firms and Bank Loan Contracts," Journal of Financial Services Research, Springer;Western Finance Association, vol. 48(1), pages 53-82, August.
    17. Taylan Mavruk & Conny Overland & Stefan Sjögren, 2020. "Keeping it real or keeping it simple? Ownership concentration measures compared," European Financial Management, European Financial Management Association, vol. 26(4), pages 958-1005, September.
    18. Randall Morck, 2005. "How to Eliminate Pyramidal Business Groups: The Double Taxation of Intercorporate Dividends and Other Incisive Uses of Tax Policy," NBER Chapters, in: Tax Policy and the Economy, Volume 19, pages 135-179, National Bureau of Economic Research, Inc.
    19. Sumon Kumar Bhaumik & Andros Gregoriou, 2010. "‘Family’ Ownership, Tunnelling And Earnings Management: A Review Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 24(4), pages 705-730, September.
    20. Luc Laeven & Ross Levine, 2008. "Complex Ownership Structures and Corporate Valuations," The Review of Financial Studies, Society for Financial Studies, vol. 21(2), pages 579-604, April.

    More about this item

    Keywords

    CEO tenure; CEO education; Family control; Firm financial sustainability; Non-linearity; Malaysia;
    All these keywords.

    JEL classification:

    • M20 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:eurasi:v:12:y:2022:i:4:d:10.1007_s40821-021-00197-7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.