Do Families Shape Corporate Board Structure in Emerging Economies?

  • Mohammad Badrul Muttakin
  • Arifur KhanEmail author
  • Nava Subramaniam
Part of the CSR, Sustainability, Ethics & Governance book series (CSEG)


This study investigates whether there are significant differences in corporate board structure between family and non-family firms using listed companies in Bangladesh where family firms are the most dominant form of public companies. The results of this study suggest that family firms in Bangladesh adopt a distinctly different board structure from non-family firms. In particular, this study finds that family firms have a lower proportion of independent directors and foreign directors than non-family firms. Further, family firms have smaller boards than non-family firms. However, family firms are likely to have more CEO duality and female directors than their non-family counterparts. The findings of this study contribute to extant research on corporate board structure. The overall findings of this study imply that families of Bangladeshi firms have a different board structure compared to non-family firms, and the structure appears to promote a close locus of control for families that facilitates family dominance to prevail.


Corporate Governance Firm Size Family Firm Independent Director Minority Shareholder 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. Adams, R. B., & Ferreira, D. (2009). Women in the boardroom and their impact on governance and performance. Journal of Financial Economics, 94(2), 291–309.CrossRefGoogle Scholar
  2. Agrawal, A., & Knoeber, C. R. (1996). Firm performance and mechanisms to control agency problems between managers and shareholders. Journal of Finance and Quantitative Analysis, 31(3), 377–397.CrossRefGoogle Scholar
  3. Anderson, R. C., & Reeb, D. M. (2003). Founding-family ownership and firm performance: Evidence from the S &P 500. Journal of Finance, 61(3), 1301–1328.CrossRefGoogle Scholar
  4. Anderson, R. C., & Reeb, D. M. (2004). Board composition balancing family influence in S& P 500 firms. Administrative Science Quarterly, 49(2), 209–237.Google Scholar
  5. Anderson, R. C., Mansi, S. A., & Reeb, D. M. (2003). Founding family ownership and the agency cost of debt. Journal of Financial Economics, 68(2), 263–285.CrossRefGoogle Scholar
  6. Andres, P., Azofra, V., & Lopez, F. (2005). Corporate boards in OECD countries: Size, composition, functioning and effectiveness. Corporate Governance: An International Review, 13(2), 197–210.CrossRefGoogle Scholar
  7. Ang, J. S., Cole, R. A., & Lin, J. W. (2000). Agency costs and ownership structure. Journal of Finance, 55(1), 81–106.CrossRefGoogle Scholar
  8. Barney, J. B., & Hansen, M. H. (1994). Trustworthiness as a source of competitive advantage. Strategic Management Journal, 15(1), 175–190.CrossRefGoogle Scholar
  9. Bartholomeusz, S., & Tanewski, G. A. (2006). The relationship between family firms and corporate governance. Journal of Small Business Management, 44(2), 245–267.CrossRefGoogle Scholar
  10. Boone, A. L., Casares Field, L., Karpoff, J. M., & Raheja, C. G. (2007). The determinants of corporate board size and composition: An empirical analysis. Journal of Financial Economics, 85(1), 66–101.CrossRefGoogle Scholar
  11. Boyed, B. K. (1995). CEO duality and firm performance: A contingency model. Strategic Management Journal, 16(3), 301–312.CrossRefGoogle Scholar
  12. Carter, D. A., Simkins, B. J., & Simpson, W. G. (2003). Corporate governance, board diversity, and firm value. The Financial Review, 38(1), 33–53.CrossRefGoogle Scholar
  13. Cascino, S., Pugliese, A., Mussolino, D., & Sansone, C. (2010). The influence of family ownership on the quality of accounting information. Family Business Review, 23(3), 246–265.CrossRefGoogle Scholar
  14. Chen, Z., Cheung, Y., Stouraitis, A., & Wong, A. W. S. (2005). Ownership concentration, firm performance, and dividend policy in Hong Kong. Pacific-Basin Financial Journal, 13(4), 431–449.CrossRefGoogle Scholar
  15. Daily, C. M., & Dalton, D. R. (1993). Board of director’s leadership and structure: Control and performance implications. Entrepreneurship Theory and Practice, 17(3), 65–81.Google Scholar
  16. Dalton, D. R., Daily, C. M., Johnson, J. L., & Ellstrand, A. E. (1999). Number of directors and financial performance: A meta-analysis. Academy of Management Journal, 42(6), 674–686.CrossRefGoogle Scholar
  17. Dyer, W. G. (1989). Integrating professional management into a family-owned business. Family Business Review, 2(3), 221–235.CrossRefGoogle Scholar
  18. Eisenberg, T., Sundgren, S., & Wells, M. T. (1998). Larger board size and decreasing firm value in small firms. Journal of Financial Economics, 48(1), 35–54.CrossRefGoogle Scholar
  19. Faccio, M., Lang, L. H. P., & Young, L. (2010). Pyramiding vs leverage in corporate groups: International evidence. Journal of International Business Studies, 41, 88–104.CrossRefGoogle Scholar
  20. Faleye, O. (2007). Does one hat fit all? The case of corporate leadership structure. Journal of Management and Governance, 13(3), 239–259.CrossRefGoogle Scholar
  21. Farooque, O. A., Zijl, T. V., Dunstan, K., & Karim, A. K. M. W. (2007). Corporate governance in Bangladesh: Link between ownership concentration and financial performance. Corporate Governance: An International Review, 15(6), 1453–1468.CrossRefGoogle Scholar
  22. Greene, W. (1997). Econometric analysis. New York: Macmillan.Google Scholar
  23. Haalien, L., & House, M. (2005). Board of directors in Norwegian family businesses, research report 7/2005. Oslo: Norwegian School of Management.Google Scholar
  24. Hermalin, B., & Weisbach, M. (1998). Endogenously chosen boards of directors and their monitoring of the CEO. American Economic Review, 88(1), 96–118.Google Scholar
  25. Hillman, A. J., & Dalziel, T. (2003). Boards of directors and firm performance: Integrating agency and resource dependence perspectives. Academy of Management Review, 28(3), 383–396.Google Scholar
  26. Huse, M. (2000). Boards of directors in SMEs: A review and research agenda. Entrepreneurship and Regional Development, 12(4), 271–290.CrossRefGoogle Scholar
  27. Imam, M. O., & Malik, M. (2007). Firm performance and corporate governance through ownership structure: Evidence from Bangladesh stock market. International Review of Business Research Papers, 3(4), 88–110.Google Scholar
  28. IMF (2010). World economic outlook database. Washington, DC: International Monetary Fund.Google Scholar
  29. Islam, A., & Khaled, M. (2005). Tests of weak-form efficiency of the Dhaka stock exchange. Journal of Business Finance & Accounting, 32(7–8), 1613–1624.CrossRefGoogle Scholar
  30. Jackling, B., & Johl, S. (2009). Board structure and firm performance: Evidence from India’s top companies. Corporate Governance: An International Review, 17(4), 492–509.CrossRefGoogle Scholar
  31. Jensen, M. (1993). The modern industrial revolution, exit, and the failure of internal control systems. Journal of Finance, 48(3), 831–880.CrossRefGoogle Scholar
  32. Kennedy, P. (1998). A guide to econometrics (4th ed.). Cambridge, MA: MIT Press.Google Scholar
  33. Lane, S., Austrachan, J., & McMillan, K. (2006). Guideline for family business boards of directors. Family Business Review, 19(2), 147–167.CrossRefGoogle Scholar
  34. Lee, J. (2006). Family firm performance: Further evidence. Family Business Review, 29(3), 103–114.CrossRefGoogle Scholar
  35. Lehn, K., Patro, S., & Zhao, M. (2009). Determinants of the size and composition of US corporate boards: 1935–2000. Financial Management, 38(4), 747–780.CrossRefGoogle Scholar
  36. Mark, Y. T., & Li, Y. (2001). Determinants of corporate ownership and board structure: Evidence from Singapore. Journal of Corporate Finance, 7(3), 235–256.CrossRefGoogle Scholar
  37. Myers, S. (1977). Determinants of corporate borrowing. Journal of Financial Economics, 5(2), 147–175.CrossRefGoogle Scholar
  38. Navarro, M. S., & Anson, S. G. (2009). Do families shape corporate governance structure? Journal of Management & Organization, 15(3), 327–345.CrossRefGoogle Scholar
  39. Neubauer, F., & Lank, A. G. (1998). The family business: It’s governance for sustainability. London: Macmillan.Google Scholar
  40. Oxelheim, L., & Randoy, T. (2003). The impact of foreign board membership on firm value. Journal of Banking and Finance, 27(12), 2369–2392.CrossRefGoogle Scholar
  41. Pfeffer, J. (1972). Size and composition of corporate boards of directors: The organization and its environment. Administrative Science Quarterly, 17(2), 218–228.CrossRefGoogle Scholar
  42. Ruigrok, W., Peck, S., & Tacheva, S. (2007). Nationality and gender diversity on Swiss corporate boards. Corporate Governance: An International Review, 15(4), 546–557.CrossRefGoogle Scholar
  43. Setia-Atmaja, L., Tanewski, G. A., & Skully, M. (2009). The role of dividends, debt and board structure in the governance of family controlled firms. Journal of Business and Accounting, 36(7 & 8), 863–898.CrossRefGoogle Scholar
  44. Siddiqui, J. (2010). Development of corporate governance regulations: The case of an emerging economy. Journal of Business Ethics, 91(2), 253–274.CrossRefGoogle Scholar
  45. Uddin, S., & Choudhury, J. (2008). Rationality, traditionalism and the state of corporate governance mechanisms: Illustration from less-developed country. Accounting, Auditing & Accountability Journal, 21(7), 1026–1051.CrossRefGoogle Scholar
  46. Ward, J. L. (1991). Creating effective boards for private enterprises. San Francisco: Jossey-Bass.Google Scholar
  47. World Bank. (2009). Bangladesh: Corporate governance country assessment. Report on the observance of standards and codes (ROSC).Google Scholar
  48. Yermack, D. (1996). Higher market valuation of companies with a small board of directors. Journal of Financial Economics, 40(2), 185–211.CrossRefGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2014

Authors and Affiliations

  • Mohammad Badrul Muttakin
    • 1
  • Arifur Khan
    • 2
    Email author
  • Nava Subramaniam
    • 1
  1. 1.Deakin UniversityBurwoodAustralia
  2. 2.School of Accounting, Economics and FinanceDeakin UniversityBurwoodAustralia

Personalised recommendations