The Influence of Family Control and Gender Diversity on Financial Performance: Leverage and Tangibility as Mediating Role
Abstract
The investigation of family control in enterprises and gender diversity has emerged as a compelling area of study in several nations, such as Indonesia. This research study aims to understand how leverage and tangibility mediate between family control, gender diversity on profitability, and sales growth; using PLS-SEM tools, this quantitative investigation involved 942 companies listed on IDX from the 2019-2021 period for analysis. Sampling was carried out using a purposive sampling method. The results showed that leverage and tangibility could not significantly mediate between family control, female directors on profitability, and sales growth. These results have implications for owners, management, and directors in that supervisory board characteristics, such as heterogeneity and family control, can influence debt and asset policies and help improve company performance.
Keywords
Full Text:
PDFReferences
Afza Amran, N., & Che Ahmad, A. (2009). Family business, board dynamics and firm value: Evidence from Malaysia. Journal of Financial Reporting and Accounting, 7(1), 53-74. https://doi.org/10.1108/19852510980000641
Al-Absy, M. S. M. (2022). Impactful women directors and earnings management. Cogent Business & Management, 9(1), 2148873. https://doi.org/10.1080/23311975.2022.2148873
Amin, Q. A., & Liu, J. (2020). Shareholders' control rights, family ownership and the firm's leverage decisions. International Review of Financial Analysis, 72, 101591. https://doi.org/10.1016/j.irfa.2020.101591
Anderson, R. C., Reeb, D. M., Upadhyay, A., & Zhao, W. (2011). The economics of director heterogeneity. Financial Management, 40(1), 5-38. https://doi.org/10.1111/j.1755-053X.2010.01133.x
Anita, R., Salmiah, N., Adino, I., & Abdillah, M. R. (2023). Wanita di Dewan Perusahaan: Reviu dan Agenda Penelitian. Jurnal Akuntansi Kompetif, 6(1), 127-133. https://doi.org/10.35446/akuntansikompetif.v6i1.1280
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of management, 17(1), 99-120. https://doi.org/10.1016/S0742-3322(00)17018-4
Biswas, P. K. (2020). Corporate governance and stock liquidity: evidence from a speculative market. Accounting Research Journal. https://doi.org/10.1108/ARJ-01-2019-0005
Björnberg, Å., & Nicholson, N. (2012). Emotional ownership: The next generation’s relationship with the family firm. Family business review, 25(4), 374-390. https://doi.org/10.1177/0894486511432471
Budiyanti, H., Husnan, S., & Hanafi, M. (2018). The Effect of Pyramidal Ownership Structure to the Financing Policies and Firm Value in Indonesia: Cronyman as Moderating Variable. Jurnal Dinamika Akuntansi, 10(1), 1-12. https://doi.org/10.15294/jda.v10i1.12878
Cambrea, D. R., Tenuta, P., & Vastola, V. (2020). Female directors and corporate cash holdings: monitoring vs executive roles. Management Decision, 58(2), 295-312. https://doi.org/10.1108/MD-11-2018-1289
Camisón, C., Clemente, J. A., & Camisón-Haba, S. (2022). Asset tangibility, information asymmetries and intangibles as determinants of family firms leverage. Review of Managerial Science, 16(7), 2047-2082. https://doi.org/10.1007/s11846-022-00522-y
Cheng, A., Li, X., Sun, Z., & Xie, J. (2021, June). How does dividend payout affect corporate social responsibility? A channel analysis. In China International Conference in Finance (CICF) 2021 Conference. http://dx.doi.org/10.2139/ssrn.2914724
Cheng, Q. (2014). Family firm research–A review. China Journal of Accounting Research, 7(3), 149-163. https://doi.org/10.1016/j.cjar.2014.03.002
Cox, T. H., & Blake, S. (1991). Managing cultural diversity: Implications for organizational competitiveness. Academy of Management Perspectives, 5(3), 45-56. https://doi.org/10.5465/AME.1991.4274465
Đặng, R., Hikkerova, L., Simioni, M., & Sahut, J. M. (2022). How do women on corporate boards shape corporate social performance? Evidence drawn from semiparametric regression. Annals of Operations Research, 1-28. https://doi.org/10.1007/s10479-022-04550-5
Datta, S., Doan, T., & Toscano, F. (2021). Top executive gender, board gender diversity, and financing decisions: Evidence from debt structure choice. Journal of Banking & Finance, 125, 106070. https://doi.org/10.1016/j.jbankfin.2021.106070
De Masi, S., Słomka-Gołębiowska, A., & Paci, A. (2021). Women on boards and monitoring tasks: an empirical application of Kanter's theory. Management Decision, 59(13), 56-72. https://doi.org/10.1108/MD-10-2019-1450
Dreux IV, D. R. (1990). Financing family business: Alternatives to selling out or going public. Family Business Review, 3(3), 225-243. https://doi.org/10.1111/j.1741-6248.1990.00225.x
Dyck, A., Lins, K. V., Roth, L., Towner, M., & Wagner, H. F. (2023). Renewable governance: Good for the environment?. Journal of Accounting Research, 61(1), 279-327. https://doi.org/10.1111/1475-679X.12462
García, C. J., & Herrero, B. (2021). Female directors, capital structure, and financial distress. Journal of Business Research, 136, 592-601. https://doi.org/10.1016/j.jbusres.2021.07.061
García-Meca, E., & Santana-Martín, D. J. (2023). Board gender diversity and performance in family firms: exploring the faultline of family ties. Review of Managerial Science, 17(5), 1559-1594. https://doi.org/10.1007/s11846-022-00563-3
Ghozali, I., & Latan, H. (2020). Partial Least Squares, Konsep, Teknik, dan Aplikasi Menggunakan Program SmartPLS 3.2.9 Untuk Peneliti. Universitas Diponegoro
Gill, S., & Kaur, P. (2015). Family involvement in business and financial performance: a panel data analysis. Vikalpa, 40(4), 395-420. https://doi.org/10.1177/0256090915605756
González, M., Guzmán, A., Pombo, C., & Trujillo, M. A. (2013). Family firms and debt: Risk aversion versus risk of losing control. Journal of Business Research, 66(11), 2308-2320. https://doi.org/10.1016/j.jbusres.2012.03.014
Gottardo, P., Moisello, A.M. (2019). Family Control and Capital Structure Choices. In: Capital Structure, Earnings Management, and Risk of Financial Distress. SpringerBriefs in Business. Springer, Cham. https://doi.org/10.1007/978-3-030-00344-9_2
Habbershon, T. G., & Williams, M. L. (1999). A resource-based framework for assessing the strategic advantages of family firms. Family business review, 12(1), 1-25. https://doi.org/10.1111/j.1741-6248.1999.00001.x
Hair Jr, J. F., Matthews, L. M., Matthews, R. L., & Sarstedt, M. (2017). PLS-SEM or CB-SEM: updated guidelines on which method to use. International Journal of Multivariate Data Analysis, 1(2), 107-123. https://doi.org/10.1504/IJMDA.2017.087624
Harris, C. R., & Jenkins, M. (2006). Gender differences in risk assessment: why do women take fewer risks than men?. Judgment and Decision making, 1(1), 48-63. https://doi.org/10.1017/S1930297500000346
Hermundsdottir, F., & Aspelund, A. (2021). Sustainability innovations and firm competitiveness: A review. Journal of Cleaner Production, 280, 124715. https://doi.org/10.1016/j.jclepro.2020.124715
Keasey, K., Martinez, B., & Pindado, J. (2015). Young family firms: Financing decisions and the willingness to dilute control. Journal of Corporate Finance, 34, 47-63. https://doi.org/10.1016/j.jcorpfin.2015.07.014
Keating, A. S., & Zimmerman, J. L. (1999). Depreciation-policy changes: tax, earnings management, and investment opportunity incentives. Journal of accounting and economics, 28(3), 359-389. https://doi.org/10.1016/S0165-4101(00)00004-5
Michiels, A., & Molly, V. (2017). Financing decisions in family businesses: A review and suggestions for developing the field. Family Business Review, 30(4), 369-399. https://doi.org/10.1177/0894486517736958
Miller, D., Le Breton‐Miller, I., & Lester, R. H. (2011). Family and lone founder ownership and strategic behaviour: Social context, identity, and institutional logics. Journal of management studies, 48(1), 1-25. https://doi.org/10.1111/j.1467-6486.2009.00896.x
Mulley, C., Nelson, J. D., & Wright, S. (2018). Community transport meets mobility as a service: On the road to a new a flexible future. Research in Transportation Economics, 69, 583-591. https://doi.org/10.1016/j.retrec.2018.02.004
Poletti‐Hughes, J., & Martinez Garcia, B. (2022). Leverage in family firms: The moderating role of female directors and board quality. International Journal of Finance & Economics, 27(1), 207-223. https://doi.org/10.1002/ijfe.2147
Rajverma, A. K., Arrawatia, R., Misra, A. K., & Chandra, A. (2019). Ownership structure influencing the joint determination of dividend, leverage, and cost of capital. Cogent Economics & Finance, 7(1), 1600462. https://doi.org/10.1080/23322039.2019.1600462
Rjiba, H., & Thavaharan, T. (2022). Female representation on boards and carbon emissions: International evidence. Finance Research Letters, 49, 103079. https://doi.org/10.1016/j.frl.2022.103079
Romano, C. A., Tanewski, G. A., & Smyrnios, K. X. (2001). Capital structure decision making: A model for family business. Journal of business venturing, 16(3), 285-310. https://doi.org/10.1016/S0883-9026(99)00053-1
Saidat, Z., Silva, M., & Seaman, C. (2019). The relationship between corporate governance and financial performance: Evidence from Jordanian family and nonfamily firms. Journal of Family Business Management, 9(1), 54-78. https://doi.org/10.1108/JFBM-11-2017-0036
Shin, Y. Z., Chang, J. Y., Jeon, K., & Kim, H. (2020). Female directors on the board and investment efficiency: evidence from Korea. Asian Business & Management, 19, 438-479. https://doi.org/10.1057/s41291-019-00066-2
Singh, A. K., Singhania, S., & Sardana, V. (2019). Do women on boards affect firm's financial performance? Evidence from Indian IPO firms. Australasian Accounting, Business and Finance Journal, 13(2), 53-68. http://dx.doi.org/10.14453/aabfj.v13i2.4
Singla, H. K. (2020). Does family ownership affect the profitability of construction and real estate firms? Evidence from India. Journal of Financial Management of Property and Construction, 25(1), 107-124. https://doi.org/10.1108/JFMPC-08-2019-0067
Spitsin, V., Ryzhkova, M., Vukovic, D., & Anokhin, S. (2020). Companies profitability under economic instability: evidence from the manufacturing industry in Russia. Journal of Economic Structures, 9, 1-20. https://doi.org/10.1186/s40008-020-0184-9
Tashfeen, R., Saleem, I., Ashfaq, M., Noreen, U., & Shafiq, M. (2023). How Do Women on Board Reduce a Firm’s Risks to Ensure Sustainable Performance during a Crisis?. Sustainability, 15(14), 11145. https://doi.org/10.3390/su151411145
Terjesen, S., Couto, E. B., & Francisco, P. M. (2016). Does the presence of independent and female directors impact firm performance? A multi-country study of board diversity. Journal of Management & Governance, 20, 447-483. https://doi.org/10.1007/s10997-014-9307-8
Torchia, M., Calabrò, A., & Huse, M. (2011). Women directors on corporate boards: From tokenism to critical mass. Journal of business ethics, 102, 299-317. https://doi.org/10.1007/s10551-011-0815-z
Wang, Y. H. (2020). Does board gender diversity bring better financial and governance performances? An empirical investigation of cases in Taiwan. Sustainability, 12(8), 3205. https://doi.org/10.3390/su12083205
Wilson, N., Wright, M., & Scholes, L. (2013). Family business survival and the role of boards. Entrepreneurship theory and practice, 37(6), 1369-1389. https://doi.org/10.1111/etap.12071
Wurgler, J. (2000). Financial markets and the allocation of capital. Journal of financial economics, 58(1-2), 187-214. https://doi.org/10.1016/S0304-405X(00)00070-2
Yousaf, I., Ali, S., & Hassan, A. (2019). Effect of family control on corporate dividend policy of firms in Pakistan. Financial Innovation, 5(1), 1-13. https://doi.org/10.1186/s40854-019-0158-9
Yudha, D. P., & Singapurwoko, A. (2017). The effect of family and internal control on family firm performance: evidence from Indonesia
Stock Exchange (IDX). Journal of Business and Retail Management Research, 11(4). https://doi.org/10.24052/JBRMR/V11IS04/TEOFAICOFFPEFISE
Zhang, W., & Cao, L. (2016). Family involvement, internal control and agency costs–Evidences from China's listed family firms. Perspectives in Science, 7, 45-51. https://doi.org/10.1016/j.pisc.2015.11.009
DOI: http://dx.doi.org/10.20961/jab.v23i1.1011
Jurnal Akuntansi dan Bisnis (JAB)
ISSN 1412-0852 (print), 2580-5444 (online)
Published by Accounting Study Program, Faculty of Economics and Business, Universitas Sebelas Maret, Indonesia
JAB on http://jab.fe.uns.ac.id/index.php/jab is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License
Visitor Statistic