Nadine Lybaert

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.

Management Control Systems In Family Firms: A Review Of The Literature And Directions For The Future

Family firms play a significant role in the global economy. Although family firm literature has devoted much time and effort to investigating topics concerning corporate governance, leadership, ownership and succession, accounting issues have received relatively scant attention. In this paper, we assemble and critically review extant literature on the choice of management controls. This is an essential topic for firms as management control systems (MCS) are used to make sure subordinates behave in function of the goals of the firm. Family firms, however, have distinct features, such as differences in governance structures and goals, which can have a significant impact on whether and how MCS are used. We conclude this review paper by providing avenues for future research that can advance our understanding of both the determinants and the outcomes of the choice of MCS.

Customer value disclosure and cost of equity capital

Purpose - This paper seeks to examine the association between a firms extent and precision of customer value disclosure and its implied cost of equity capital. In addition, it aims to investigate whether industry competition intensity attenuates this association. Design/methodology/approach - The content of corporate websites from four continental European countries is analysed on the presence and precision of customer value information and empirically test whether content and precision are associated with the firms implied cost of equity capital measurement. Findings - The results show a negative association between cross-sectional differences in the extent of customer value disclosure and cross-sectional differences in a firms cost of equity capital. In addition, the precision of the customer value information disclosed affects this association. It is observed that a negative relationship between quantitative (or hard) customer value disclosure and a firms cost of equity capital, but not for qualitative (or soft) customer value disclosure. As expected, industry competition intensity attenuates the association between quantitative customer value disclosures and a firms cost of equity capital. Research limitations/implications - The paper considers web placement of customer value disclosure although a firm might disclose such information through other information channels as well. Practical implications - A firm tends to benefit economically from more precise customer value disclosure. Originality/value - The paper extends existing evidence by considering the capital market implications of disclosing customer value information. In addition, it examines whether industry competition affects the association between customer value disclosure and the firms cost of equity capital.

Auditor choice in private firms: a stakeholders perspective

This paper aims to examine whether a private firm’s demand for a Big4 auditor is influenced by the auditor choice of its main supplier, customer and competitor. The authors rely on institutional theory to explain this stakeholders’ influence. The authors also examine whether the extent to which the firm’s board of directors engages in networking moderates this influence.,Questionnaire data are combined with archival data of 210 Belgian private firms with a statutory audit requirement. Logistic regression analysis is applied to examine to what extent firms follow their main competitor, customer and supplier in hiring a Big4 auditor.,The results reveal a positive association between the firm’s choice of a Big4 auditor and its main supplier being audited by a Big4 auditor, supporting the conformance effect (isomorphism) toward suppliers as hypothesized by institutional theory. The extent of board networking, however, seems to weaken this effect. Toward competitors, a divergence effect instead of a conformance effect is found, which indicates the existence of competitive differentiation regarding auditor choice.,While prior studies mainly focus on the agency relationships between shareholders, debtholders and managers to explain auditor choice, this study also takes into account the firm’s other main stakeholders by relying on institutional theory. Both the conformance effect toward suppliers as well as the divergence effect toward competitors provide interesting additional perspectives on why auditors are demanded, leading to interesting future research opportunities.,This paper fulfills an identified need to consider additional theories in explaining audit outcomes.

Formal human resource practices in family firms

Purpose n n n n nThe importance of formal human resource (HR) practices is widely recognized in management literature, but under-researched in the small business and family firm domain. Previous research indicates that family firms rely more on informal HR practices, based on social networks. However, given the heterogeneity of family firms, one cannot assume that all family firms are reluctant to formalize their HR. As the CEO is the key decision maker who covers HR management in family firms, the effect of the CEO type on formal HR practices will be studied. The paper aims to discuss these issues. n n n n nDesign/methodology/approach n n n n nBased on a large-scale survey, resulting in a response of 532 family SMEs, the authors perform a hierarchical regression analysis studying the effect of a family/nonfamily CEO on the use of formal HR practices, introducing several moderating effects: CEO generational stage, tenure and education. n n n n nFindings n n n n nResults indicate that family firms with a family CEO have more formal HR practices than those managed by a nonfamily CEO due to higher levels of goal alignment and intentional trust between the owning family and family CEO. Moreover, family firms managed by first generation family CEOs and family CEOs with a higher education have more formal HR practices. n n n n nPractical implications n n n n nThe findings suggest that family CEOs can be equally or even more able as nonfamily CEOs to run a family firm in a formalized/professionalized manner. n n n n nOriginality/value n n n n nGiven the scant amount of research on HR formalization in family firms, even though literature documents performance increasing effects, this study fulfils the need to study the effect of the CEO on HR formalization.