Family ownership, board committees and firm performance: evidence from Hong Kong

Abstract

Purpose

This paper seeks to examine the relationship between board committees and firm performance and the moderating effect of family ownership for public companies in Hong Kong.

Design/methodology/approach

This study employs publicly available data from financial databases and annual reports of a sample of 346 firm‐year observations of public companies in Hong Kong for the periods 2001‐2003.

Findings

The empirical evidence indicates that a nomination (remuneration) committee is positively (negatively) related to firm performance, depending on the independence of its composition. Furthermore, family ownership does have an adverse effect on the relationship between board committees, specifically the remuneration committee, and the performance of public companies in Hong Kong.

Research limitations/implications

This study is based on publicly available data and the board process is not actually observed.

Practical implications

The effectiveness of a board committee is contingent on its independence and family ownership.

Originality/value

This paper provides empirical evidence that an independent board committee could enhance the corporate governance of public companies in Hong Kong and would be of interest to regulatory bodies, business practitioners, and academic researchers.

Citation

Lam, T. and Lee, S. (2012), "Family ownership, board committees and firm performance: evidence from Hong Kong", Corporate Governance, Vol. 12 No. 3, pp. 353-366. https://doi.org/10.1108/14720701211234609