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Journal of Business Ethics
Published in: Journal of Business Ethics 2/2014

01-08-2014

Family Ownership and Corporate Misconduct in U.S. Small Firms

Authors: Shujun Ding, Zhenyu Wu

Published in: Journal of Business Ethics | Issue 2/2014

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Abstract

This study adds to the theory of family business management by exploring the effects of family ownership on the corporate misconduct of small firms in the United States. The empirical findings indicate that small family-owned firms are less likely to commit misconduct than small non-family-owned firms. We interpret this finding as family firms aiming to achieve the trans-generational succession of moral capital. Further investigation shows a nonlinear family-ownership–misconduct relationship. A negative relationship between them only appears in mature firms. We further show that for relatively mature firms, only family firms with older owners are less likely to commit corporate misconduct.
next article Temptation, Monetary Intelligence (Love of Money), and Environmental Context on Unethical Intentions and Cheating

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Footnotes
1
See previous studies, such as Beasley (1996), Chen et al. (2006), Dechow et al. (1996), Everett et al. (2007), Firth et al. (2005), Jia et al. (2009), Ding et al. (2010), Persons (2006), Cumming et al. (2010a, b), and Cumming and Zambelli (2010).
 
2
These prior studies include, but are not limited to, Jones (1991), Thompson and Hood (1993), Ede et al. (2000), Tilley (2000), Hannafey (2003), Besser and Miller (2001), Lepoutre and Heene (2006), and Ivanova (2007).
 
3
MRL31.1 “captures reasons the firm felt it would be turned down,” and one of the choices refers corporate misconduct to “embezzlement, fraud, [and] theft” (Annotated Survey Questionnaire, 2003 Survey of Small Business Finances, p. 174, 2003).
 
4
These nine geographical divisions are New England, Middle Atlantic, East North Central, West North Central, South Atlantic, East South Central, West South Central, Mountain, and Pacific (Methodology Report, the 2003 SSBF, p. 126, 2005). Nine geographical dummies based on these divisions are named Geographical Dummy 1, Geographical Dummy 2, … , Geographical Dummy 8, and Geographical Dummy 9, respectively.
 
5
While the population of the 2003 SSBF consists of firms with fewer than 500 employees, the mean of the variable SIZE is only 20. This is mainly because a large portion of the firms in the sample has fewer than 50 employees. The median value of the variable SIZE is five, with its 25-percentile and 75-percentile cut-offs being 2 and 16 employees. In this sample, 90 % of the firms have fewer than 52 employees and 95 % have fewer than 92 employees.
 
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Metadata
Title
Family Ownership and Corporate Misconduct in U.S. Small Firms
Authors
Shujun Ding
Zhenyu Wu
Publication date
01-08-2014
Publisher
Springer Netherlands
Published in
Journal of Business Ethics / Issue 2/2014
Print ISSN: 0167-4544
Electronic ISSN: 1573-0697
DOI
https://doi.org/10.1007/s10551-013-1812-1

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