Original Research

The composition of listed family firm boards in South Africa: Alignment to best practices and governance codes

Gabriela dos Santos, Suzette Viviers, Elmarie Venter
South African Journal of Business Management | Vol 55, No 1 | a4565 | DOI: https://doi.org/10.4102/sajbm.v55i1.4565 | © 2024 Gabriela dos Santos, Suzette Viviers, Elmarie Venter | This work is licensed under CC Attribution 4.0
Submitted: 07 March 2024 | Published: 27 August 2024

About the author(s)

Gabriela dos Santos, Department of Business Management, Faculty of Economic and Management Sciences, Stellenbosch University, Stellenbosch, South Africa
Suzette Viviers, Department of Business Management, Faculty of Economic and Management Sciences, Stellenbosch University, Stellenbosch, South Africa
Elmarie Venter, Department of Business Management, Faculty of Business and Economic Sciences, Nelson Mandela University, Port Elizabeth, South Africa; and, Family Business Unit, Faculty of Business and Economic Sciences, Nelson Mandela University, Port Elizabeth, South Africa

Abstract

Purpose: As elsewhere in the world, family firms (FFs) play a critical role in the South African economy. There is, however, scant research on how, if at all, listed South African FFs differ from their non-family counterparts concerning board composition and independence. The purpose of this study was to address this knowledge gap by investigating director and chair independence, chair-chief executive officer (CEO) role duality, board race and gender diversity, as well as board rotation at FFs listed on the Johannesburg Stock Exchange (JSE) over the period 2006 to 2022. The study was informed by the agency, socioemotional wealth, and stewardship theories.

Design/methodology/approach: Data were collected on 753 directors who served on the boards of 37 JSE-listed FFs. Data sources included Bloomberg and the FFs’ integrated reports and websites. Data were analysed by examining trends in the considered variables over time.

Findings/results: While family involvement at board level remained relatively constant, considerably fewer family members served as board chairs and CEOs towards the end of the research period. Board independence increased significantly over the research period.

Practical implications: Shareholder activists’ requests for improved board governance of JSE-listed FFs seem justified. Activists should, however, also consider the benefits of family stewardship when evaluating director and chair independence in these firms. This study also identifies practical implications for nomination committees and investor education.

Originality/value: The use of multiple theoretical lenses provides a balanced view of board governance at JSE-listed FFs. The study contributes to the scant body of knowledge on board composition and independence in listed FFs in South Africa, which will enable future FF research.


Keywords

board independence; board tenure; corporate governance; family firm governance; principal-principal agency conflicts; socioemotional wealth preservation; stewardship; transparency

JEL Codes

L20: General; L21: Business Objectives of the Firm; M10: General

Sustainable Development Goal

Goal 16: Peace, justice and strong institutions

Metrics

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