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Family involvement and firm performance: Evidence from Saudi Arabia

Al-Dubai, Shehabaddin Abdullah Abdul Wadod (2014) Family involvement and firm performance: Evidence from Saudi Arabia. PhD. thesis, Universiti Utara Malaysia.

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Abstract

Economies around the world are full of family businesses, the main and significant players in the growth of a nation. Saudi Arabia is no exception. As a result, family firm performance is considered as an important variable in the context of financial and management research. This study investigates the relationship between family involvement in ownership, management, control, and succession, as well as the presence of other blockholders on firm performance. Using longitudinal data from a panel of 38 non-financial Saudi family publiclisted companies (190 firm-year observations) from 2007 to 2011, and employing two different performance indicators (MBV and ROA), this study provides a sharp insight and deep understanding of the family firm characteristics and their influence on firm performance. The results provide strong evidence of the outperformance of family firms. However, when the non-linearity of family ownership is taken into account, the results become different; firm value decreases when family ownership increases from 0 to 31 per cent, and the relationship is positive beyond the 31 per cent level. Further, it is found that the positive impact of family ownership depends mainly on whether the CEO positions are occupied by the founders or not. In other words, founder CEOs play important roles in improving the firms' market and accounting performance. Family involvement on the board of directors is also found to be positively related to firm value, indicating that family directors are considered as stewards of the companies. Thus, they work for the benefit of the firms and the shareholders, In terms of the presence of other blockholders in ownership, this study documents its negative impact on market performance. In contrast, the presence of other blockholders in management positively influences firm accounting performance The results, in general, are statistically and methodologically robust.

Item Type: Thesis (PhD.)
Uncontrolled Keywords: Family business, family involvement, firm performance, other blockholders, Saudi Arabia
Subjects: H Social Sciences > HD Industries. Land use. Labor. > HD28-70 Management. Industrial Management
H Social Sciences > HF Commerce. > HF5001-6182 Business
Divisions: Othman Yeop Abdullah Graduate School of Business
Depositing User: Mr. Badrulsaman Hamid
Date Deposited: 10 May 2015 03:10
Last Modified: 14 Apr 2016 02:42
URI: http://etd.uum.edu.my/id/eprint/4369

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