The Effect of Family Aspects on Corporate Governance and Firm's Financial Performances: Empirical Evidences of the Family Business Companies listed on the Stock Exchange of Thailand and the Market for Alternative Investment

Abstract

The Objectives of the present research article were to 1) examine the effect of the family aspects including family ownership concentration, family management, and family control of board on their financial performances of the family business companies listed in the Stock Exchange of Thailand (SET) and the Market for Alternative Investment (MAI); 2) to examine the effect of the family aspects including family ownership concentration, family management, and family control of board on their corporate governance of the family business companies listed in the SET and MAI. 3) to examine the effect of corporate governance on financial performances of the family business companies listed in the SET and the MAI; and 4) to examine indirect effect of the family aspects including family ownership concentration, family management, and family control of board on their financial performances via corporate governance of the family business companies listed in the SET and the MAI. The data was collected from 160 family business companies listed in the SET and in the MAI as population with a period of the study from Jan 1, 2015 to December 31, 2019.

The SEM model fit analysis the research found that all indices analyzed were found to be harmonious therefore significant in the context of the present study. The SEM path analysis found significant relationship between Family Control of the Board (FCB) and Firm’s Financial Performance (FFP). The Return of Equity (ROE), Return of Assets (ROA), and Tobin’s Q on FFP variables are found to be highly significant; No significant relationship was found between Family Ownership Concentration (OC), Family Management (FM), FCB, and Corporate Governance (CG) variables. This research insights are useful in understanding how family ownership concentration and control affects a company’s performance in Thailand in the present years.