Does family ownership increase the resilience of firm performance? The moderating role of risk-taking behaviour and leverage in emerging economies

Abstract

This study aims to examine the relationship between family ownership (FAMOW) and a firm's financial performance, including return on assets (ROA), return on equity (ROE), and Tobin’s Q. Additionally, it seeks to determine whether, in the case of non-financial enterprises in Bangladesh, the relationship between FAMOW and firm performance is moderated by risk-taking behavior and leverage. Secondary data from 2010 to 2021 were collected from 228 listed non-financial firms on the Dhaka Stock Exchange (DSE). The study's findings indicate that while Tobin's Q (TQ) is negatively significant with family ownership, return on equity (ROE) and return on assets (ROA) are positively significant. FAMOW has a positive and statistically significant relationship with both ROA and ROE, with coefficients of 0.008 and 0.005, respectively. The moderating influence of risk-taking behavior and leverage was not examined in the previous study; however, this study expands on the findings by including risk-taking behavior and leverage as moderators. Taking into consideration the findings of the inquiry, it is recommended that family firms operating in economies that are still in the process of growth prioritize the establishment of a robust corporate governance structure. As a result of implementing suitable governance measures, it has been established that the impacts of familial ownership on business performance are either amplified or moderated.