The Impact of Corporate Governance Mechanisms on Value Creation in Family Firms: Evidence from an Emerging Economy

Corporate governance (CG) is a system by which firms are directed and controlled. Through its mechanisms, it ensures optimal levels of efficiency, exploits opportunities, and prevents conflicts of interest between directors, shareholders, and stakeholders. The studies do show a positive relationship between CG and performance, but they are conducted in developed countries with stable legal and economic environments. Thus, CG contributes to the value creation (VC) of the firms. But in family firms, the concentration of power resulting from the overlapping of its subsystems (family, business, and ownership) influences the functioning of CG, and probably, VC. Setting goals, monitoring results, or controlling performance can be some of its forms. But we do not know the influence in emerging countries.