Corporate Governance Compliance: an Analysis for Colombian Family and Non-Family Businesses

Abstract

Introduction. Recently, the study of corporate governance in family businesses has received greater attention due to the prevalence, importance, and impact of these companies and the agency problems that arise due to their structure. In this sense, corporate governance can help family businesses efficiently monitor management to reduce opportunistic behaviors both from managers and those shareholders who control the company. Objective. Study the relationship between family nature and the adoption of corporate governance practices in companies listed on the Colombian stock market. Materials and Methods. A quantitative analysis was performed with panel data. Regression models were estimated using random effects to deal with unobservable heterogeneity and omitted variables. The sample corresponded to 479 observationsyear of 124 companies listed in the Colombian stock market between 2015 and 2018. Results. Lower compliance with corporate governance was found in family businesses. Conclusion. The lower compliance in family businesses may be since these companies have fewer incentives to implement good corporate governance practices given that the costs of such implementation exceed the possible benefits, added to the fact that these benefits end up being diluted among all the shareholders that are part of the family