The Impact Of Board Composition On Family Firm Performance

In most nations of the world, family firms play an important role in the economics due to their contributions to the production, employment and fortune making. Family firms occupy a large proportion of private companies. Along with the economic reform and openness, this special group has become the driving force for Chinese economic development. Thus, how to perform research on the family firms and put forward suggestions for further development of the group have received the attention of academic areas.However, most of the existing researches concentrate on the management style and development mechanism of family firms, showing little light on the empirical research of board composition. Further exploration is in need. On the other hand, the researches are lack of a detailed classification for family firms to find out the subtle difference.This paper tries to investigate the relationship between family firm performance and board composition, including board size and independent board proportion, with a classification of whether the ultimate controller acts as the board director or CEO. After detailed empirical analyses and robustness test, the researcher discovers that the independent board proportion is significantly and negatively related with firm performance when the ultimate controller is the board director or CEO while the correlation totally overturns when the ultimate controller is not in the position. But the board size shows no sign of any relation with the firm performance in both of the two scenarios.