Review of Corporate Finance > Vol 2 > Issue 4

The Impact of Governance Structure on the Performance of Small Family and Nonfamily Firms: The Moderating Role of Firm Age

Vitaliy Skorodziyevskiy, Department of Management and Information Systems, Mississippi State University, USA, vs658@msstate.edu , Hanqing “Chevy” Fang, Department of Business and Information Technology, Missouri University of Science and Technology, USA, fangha@mst.edu , Esra Memili, Department of Marketing, Entrepreneurship, Hospitality & Tourism, University of North Carolina Greensboro, USA, e_memili@uncg.edu , James J. Chrisman, Center of Family Enterprise Research, Department of Management and Information Systems, Mississippi State University, USA, jchrisman@business.msstate.edu
 
Suggested Citation
Vitaliy Skorodziyevskiy, Hanqing “Chevy” Fang, Esra Memili and James J. Chrisman (2022), "The Impact of Governance Structure on the Performance of Small Family and Nonfamily Firms: The Moderating Role of Firm Age", Review of Corporate Finance: Vol. 2: No. 4, pp 721-743. http://dx.doi.org/10.1561/114.00000028

Publication Date: 07 Dec 2022
© 2022 V. Skorodziyevskiy, H. “Chevy” Fang, E. Memili and J. J. Chrisman
 
Subjects
Corporate finance: Agency theory and information,  Family-owned firms,  Firm ownership,  Management structure, governance and performance
 
Keywords
JEL Codes: D19, D21, D22, D82, G32, L25, L26, O51
Agency theoryfamily firmfamily ownershipfirm performancefirm age
 

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In this article:
Introduction 
Theory and Hypothesis Development 
Methods 
Discussion 
Conclusion 
References 

Abstract

Drawing upon agency theory and the family business literature, we hypothesize that governance structure, the extent to which ownership and management are concentrated in the hands of a single individual or family, has an inverted U-shaped relationship with firm performance in small owner-managed firms. We further hypothesize that the inverted U-shaped relationship diminishes as firms age. Using a cross-sectional sample of 8,201 SBDC clients, we find support for an inverted U-shaped relationship between governance structure and firm performance. We also find that this relationship is moderated by firm age. Our findings have implications for the fields of finance and family business in terms of the concentration and separation of ownership and management in single and multi-family firms.

DOI:10.1561/114.00000028

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Review of Corporate Finance, Volume 2, Issue 4 Special Issue on Family Firms: Articles Overiew
See the other articles that are part of this special issue.