Anneleen Michiels

CEO compensation in private family firms: pay-for-performance and the moderating role of ownership and management

Although classical agency theorists claim that pay-for-performance is not relevant in the context of private family firms, the authors provide empirical evidence of the opposite, using a sample of 529 privately held U.S. family firms. The results suggest that objective performance-based measures play a significant role in CEO compensation. Additionally, the authors find that in private family firms CEO compensation is more responsive to firm performance in firms with low ownership dispersion and in the controlling-owner stage. Furthermore, the positive pay-for-performance relation is slightly stronger for nonfamily CEOs than for family CEOs.

Financing Decisions in Family Businesses: A Review and Suggestions for Developing the Field:

Motivated by the growing attention to the financing decisions of family firms, this review brings together the two highly relevant research fields of family business and finance. This study critically reviews 131 articles on financing decisions in family businesses, published between 1977 and 2016 in 64 finance and management journals. We develop a state of the art on family business financing literature and present a model to guide extant and future research by identifying gaps across the theoretical perspectives and across context-specific elements such as family business heterogeneity and country-specific factors.

Formal compensation practices in family SMEs

Purpose By investigating the use of formal compensation practices in family small- and medium-sized enterprises (SMEs), the purpose of this paper is to provide important new insights in these issues for academics, as well as family business practitioners, prospective applicants and financiers of family businesses. Moreover, this study includes a contingency that allows to explore heterogeneity across family businesses in their use of formal compensation practices: the CEO type. Design/methodology/approach A survey of 124 small- and medium-sized Belgian family businesses to explore the use of formal compensation practices is analyzed by the author. Findings The results support the hypothesis that family firms with a family CEO adopt significantly less formal compensation practices than their counterparts that are led by a non-family CEO. Research limitations/implications Generalizing the findings of this study must be taken with care, as the findings are based on a cross-sectional sample of family SMEs in one country, Belgium. Future research can build on these findings with studies on larger samples in other countries. Practical implications This study may be interesting for family business practitioners and consultants, as it provides insight in the actual use of formal compensation practices that are recommended as a best practice in numerous practitioner handbooks. Also, the results of this study might be important for prospective applicants and financiers, since the compensation system is an important communication device to signal legitimacy to external stakeholders. Originality/value Compensation issues are among the main challenges SMEs, especially family firms, face. Despite the clear importance of this matter, academic interest has been rather limited. This paper therefore displays sound descriptive survey results and empirically investigates the determinants of the use of formal compensation practices in Belgian family SMEs by distinguishing between different types of family businesses.

The effect of family business professionalization on dividend payout

Purpose The topic of dividend policies of private family-controlled firms has aroused the interest of corporate finance and governance scholars and practitioners alike. However, a lot of questions concerning the dividends in privately held family firms remain unanswered. The purpose of this paper is to examine whether a private family firm’s dividend payout is influenced by its degree of professionalization. Design/methodology/approach The hypotheses are tested on a sample of 492 small to medium-sized Belgian family-controlled businesses with Tobit regression models. Findings The results show that professionalized family-controlled firms pay higher dividends to their shareholders than do less-professionalized firms. In particular, the use of financial control systems, non-family involvement in governance systems, and the use of human resource control systems have a positive significant impact on the average level of dividend payout. Practical implications This study may be of interest to family business consultants and (potential) investors, as the results contradict the assumption that family businesses (especially those privately held) will always have a no or low dividend policy. Originality/value Investigating dividend payout in the context of other components than family ownership (in this case, professionalization) can broaden our understanding of dividend payout.