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.
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7 December 2022
Research Article|
December 07 2022
The Impact of Governance Structure on the Performance of Small Family and Nonfamily Firms: The Moderating Role of Firm Age Available to Purchase
Vitaliy Skorodziyevskiy;
Vitaliy Skorodziyevskiy
Department of Management and Information Systems, Mississippi State University
, Mississippi State, MS, USA
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Hanqing “Chevy” Fang;
Hanqing “Chevy” Fang
Department of Business and Information Technology, Missouri University of Science and Technology
, Rolla, MO, USA
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Esra Memili;
Esra Memili
Department of Marketing, Entrepreneurship, Hospitality & Tourism, University of North Carolina Greensboro
, Greensboro, NC, USA
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James J. Chrisman
Center of Family Enterprise Research, Department of Management and Information Systems, Mississippi State University
, Mississippi State, MS, USA
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Authors contributed equally.
Online ISSN: 2693-9320
Print ISSN: 2693-9312
© 2022 V. Skorodziyevskiy, H. “Chevy” Fang, E. Memili and J. J. Chrisman
2022
V. Skorodziyevskiy, H. “Chevy” Fang, E. Memili and J. J. Chrisman
Licensed re-use rights only
Review of Corporate Finance (2022) 2 (4): 721–743.
Citation
Skorodziyevskiy V, Fang H“, Memili E, Chrisman JJ (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, doi: https://doi.org/10.1561/114.00000028
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