Corporate Governance and Financial Performance: Family Firms vs. Non-Family Firms

1. Introduction

Family businesses form the backbone of economic development. They positively impact the regions in which they operate. Family businesses account for two-thirds of all global businesses, constituting an estimated 70% to 90% of global GDP and contributing between 50% and 80% of global employment ( Farrington et al. 2020 ). Emerging markets, especially, are predicted to add 4000 family businesses with revenues over USD 1 billion to the world economy and will account for 40% of the world’s largest corporations by 2025 ( Björnberg et al. 2014 ). Family businesses make an essential contribution towards economic growth and creating employment, especially in South Africa ( Viviers 2022 ).

Family businesses differentiate themselves from non-family businesses in several ways: they have survived into the 21st century across a wide variety of economies, including emerging markets; they are considered to show higher profitability in the long term; they are deemed to be financially prudent; and they are less likely to undergo retrenchments and are more likely to recruit employees, notwithstanding economic downturns ( Farrington et al. 2020 ). The corporate governance configurations of non-family and family businesses are also different and can play a role in determining their financial sustainability.

An indication of a family business is its ownership structure, which is vital to a firm’s longevity and sustainability ( Kevser and Elitaş 2019 ). It affects the corporate governance configuration and has financial performance implications, from which valuable lessons can be learned in emerging markets. Building on the construct of familiness, which has been referred to as the competitive advantage of family firms ( Pearson et al. 2008 ), this study’s objectives are, first, to investigate the relationship between financial performance and the corporate governance characteristics within a board of the firm, and second, to draw comparisons and inform on differences between family firms and non-family firms, as shown in Figure 1 and Figure 2 .

This study is the first conducted in South Africa to investigate the relationship of this combination of corporate governance characteristics with financial performance, specifically focusing on family businesses. Some family business studies in South Africa have focused on governance quality and shareholder voting preference, succession, and governance in general ( Viviers 2022 ; Farrington and Jappie 2016 ), but, to the authors’ knowledge, no studies yet focus on the relationship of corporate governance characteristics and financial performance, nor adopt a comparative view. This novel comparison between family and non-family businesses within the same industry adds weight to these findings, where the differences are interpreted to contribute to the argument for family businesses’ financial uniqueness to non-family businesses.

In their seminal work, Berle and Means ( 1932 ) documented differences in ownership structures: first, owners do not control daily operations; second, managers control daily business operations without significant ownership. A downside is that this allows managers to use corporate wealth to their advantage and hurt the company’s financial performance, a notion derived from the agency theory ( Jensen and Meckling 1976 ). The owners and managers are the same in family businesses, whereas in non-family businesses, the roles of owners and managers are separated. Unfortunately, concentrated family-based ownership has also been found to harm corporate financial performance through private benefits, a notion derived from the resource-based view theory (RBV) ( Bebchuk 1999 ). A similar problem has been identified in both business structures based on different business foundations. Contrary to the above, according to the stewardship theory, all business managers are assumed to act in the business’s best interests. This phenomenon may give family businesses certain financial performance advantages ( Davis et al. 1997 ). These opposing theories create a platform from which to investigate a multi-theoretical approach, to advance the possible convergence of family business literature.

SA is a global corporate governance leader guided by the King Code IV guidelines, following King Codes I, II, and III ( Tshipa et al. 2018 ). Corporate governance and ownership concentration are strongly aligned, where ownership concentration refers to the percentage of controlling shareholding ( Nel et al. 2021 ; Vieira 2018 ) and where corporate governance configurations guide the oversight and control of a firm. This, in turn, influences the firm’s financial performance ( Kevser and Elitaş 2019 ). Therefore, boards play a critical role in fulfilling these requirements.

The corporate governance characteristics identified for this study are based on their importance in the boardroom. These are board size, gender diversity, board independence, and executive compensation, which will be unpacked in the literature review below. Financial performance will be evaluated using accounting- and market-based measures. Prior research on corporate governance and financial performance has been conducted in SA. However, these studies did not distinguish between family- and non-family-owned businesses ( Tshipa et al. 2018 ; Muchemwa et al. 2016 ; Willows and van der Linde 2016 ).

The contributions of this study are new in many respects. Firstly, this study invokes a novel confluence of agency, stewardship, and RBV theories about corporate organisational dimensions within an emerging market context. Secondly, the results of this study contribute to the debate on corporate governance characteristics, wherein board gender diversity in a family business is significant and positive for the accounting-based measurement of financial performance. This expands on the RBV theory that female board members who are part of the family offer the advantage of adding unique resources. Board size is negatively related to financial performance for both family and non-family businesses. This finding is contrary to the expectations of the King Code on governance in SA. Additionally, this study expands on the relational linkages of corporate governance to financial performance through a specific focus on family businesses compared to non-family businesses, which, to date, has been lacking, especially for emerging markets. This study distinguishes between market-related and accounting-based measurements of financial performance. This research bolsters the debate that family and non-family businesses must be investigated and treated separately ( Kevser and Elitaş 2019 ).

The remainder of this article is organised as follows. First, the relevant literature for the theoretical foundation and study variables is discussed. Then, the study’s materials and method will be explained, followed by a discussion of the results. Finally, the conclusion and recommendations are presented.

2. Literature Review and Hypothesis Development

Family businesses, financial performance, corporate governance, and ownership concentration are the key concepts of this study. The objectives are to identify firstly whether there is a relationship between financial performance and corporate governance and, secondly, whether family firms outperform non-family firms through their application of corporate governance characteristics. These concepts are presented with the underlying theories of agency, stewardship, and the RBV, motivating a multi-theoretical approach towards family firms in the literature.

Many definitions exist on how a family business is identified as such, especially in the modern world. This is problematic in family business research, because of the lack of a unified definition of a family business ( Harms 2014 ), which highlights the curiousness of how a family business is defined as an important determinant of outperformance compared to a non-family business. Some definitions of family businesses include:

Percentage of share capital (voting or otherwise) held by the owning family ( Barontini and Caprio 2006 ).

The number of family members employed in executive or other positions ( Anderson and Reeb 2003 ).

The extent of multi-generational family involvement in the business ( Gómez-Mejía et al. 2007 ).

Managerial involvement and/or ownership control by the founder’s direct descendants ( Morck et al. 1998 ).

Despite multiple definitions, the equity percentage owned by families is the most common identifier of a family business and acts as the main point of contention regarding what constitutes a family business. In line with the International Financial Reporting Standards (IFRS), this study adopts 20% as the threshold for family business identification. Twenty percent of voting power implies significant influence, indicating participation in the investee’s financial and operating policy decisions ( IFRS 2011 ). Similarly, Nel et al. ( 2021 ) used 20% shareholding as the threshold for controlling ownership. This is consistent with previous research ( Moolchandani and Kar 2021 ; Miller and Le Breton-Miller 2006 ; Anderson and Reeb 2003 ) in terms of combining the family’s ownership with operational involvement and business management.

Through agency theory, an opportunity exists to investigate family business dynamics, given the coalescence of both owners and managers and their implications for financial performance ( Jensen and Meckling 1976 ). Here, the agency problem can become challenging for non-family firms. In contrast, family firms could avoid this problem by having ownership and managerial influence converge, as suggested by the stewardship theory.

The stewardship theory has historically been more closely aligned with family firm research. According to stewardship theory, all business managers are assumed to act in the business’s best interests, a phenomenon that may present family businesses with financial performance advantages ( Davis et al. 1997 ). This may not always be the case for non-family firms, making the governance structures critical to aligning business and managers’ interests. Through RBV, we can identify the unique resources that may provide family businesses with long-term competitive advantages ( Habbershon and Williams 1999 ). These unique resources may come from familiness, whereby business knowledge has been embedded within the family. However, as is evident in continuing corporate governance research, resources outside of those of the owners are also investigated regarding which unique resources can provide a competitive advantage. These three theories stand alone, but, according to Jackling and Johl ( 2009 ), no single theory manages to explain the links between corporate governance characteristics and financial performance. However, an argument can be made that these theories should be used as a multi-theoretical approach for viewing family and non-family financial performance as related to the corporate governance characteristics of the board.

2.1. Financial Performance

Businesses with diversified shareholders tend to make investment decisions with the goal of maximising firm value and shareholder wealth ( Anderson and Reeb 2003 ). However, large-scale, undiversified shareholders, as is usually the case in family businesses, may have incentives to increase firm growth, improve technological innovation, and sustain firm survival as their primary objectives, which may not necessarily lead to shareholder wealth maximisation ( Adhikari and Sutton 2016 ). These decisions are influenced by the firm’s financial performance.

Accounting- and market-based measures have been criticised when used as a singular measure of financial performance. Accounting measures rely heavily on the historical financial performance of a firm. Their weaknesses include the fact that they are susceptible to management manipulation and that the choice of accounting policies is open to various interpretations ( Choi et al. 2010 ). Conversely, a weakness of market-based measures is a singular focus on the firm’s future performance, making them susceptible to the vagaries of market participants’ sentiments ( Waddock and Graves 1997 ).

To stabilise this study’s knowledge base, accounting and market-based financial performance measures (ROA and Tobin’s Q, respectively) are included to provide short-term and long-term measures of financial performance. Both have been used to understand the relationship between corporate governance and financial performance ( Mensah and Bein 2023 ; Tshipa et al. 2018 ; Darweesh 2015 ; Amato and Burson 2007 ).

2.2. Corporate Governance Characteristics

Building on the work of Berle and Means ( 1932 ) on ownership structures, corporate governance has become essential to all firms. A company’s corporate governance structure comprises three main actors: owners/shareholders, the board of directors, and senior managers. A board of directors is fundamental to maintaining corporate governance structures through which shareholders can monitor and reward senior management performance ( Madhani 2017 ). Within a family business, these corporate governance structures also need to establish oversight and control mechanisms for the interlinked family and business so that adequate and transparent information can flow freely, thereby avoiding interference in the operational management of the family business by family business owners ( Viviers 2022 ). The business owners appoint the board of directors to monitor and direct the actions of the managers and it is, therefore, the link between the owners of the business and its managers. Unfortunately, the functions of the board have met with many challenges, such as efficiency and its contribution to financial performance ( Mensah and Bein 2023 ). Therefore, continuous research into board characteristics remains relevant.

Viviers ( 2022 ) investigated family firms by assessing governance quality regarding shareholder voting preferences. She included six governance measures, of which three are used in this article (board size, gender diversity, and board independence). The recommendations from Viviers ( 2022 ) emphasised that firms should expand on their board diversity, especially with non-family members, and should not appoint family members as independent board members but appoint them as long-tenured directors. The specific focus on emerging market family businesses in relation to non-family businesses is still novel, drawing from experiences of the different ownership structures in the executive boardroom.

In this study, corporate governance characteristics are described by ownership concentration, board size, board gender diversity, board independence, and board executive compensation.

3. Material and Methodology

The methodology is quantitative, using secondary data for 15 family and non-family JSE-listed firms for the period ranging from 2015 to 2019. It specifically excludes the COVID-19 period to avoid the results being distorted during the pandemic. A sample size of 30 or more observations is considered acceptable when using panel data analysis ( De Jager 2008 ; Lind et al. 2005 ).

Data was collected from EquityRT, an international depository of company and financial data ( Nharo et al. 2021 ). Statistical analysis was applied using panel regression analysis to determine the relationship between financial performance and the independent variables of ownership structure and corporate governance characteristics for family and non-family firms, respectively. Descriptive statistics were used to supplement comparisons between ownership structures.

A purposive sampling strategy was followed to identify a single sector with high numbers of listed family businesses versus non-family businesses in order to establish a setting for a comparative study. All JSE sectors were analysed to identify suitable sectors. The sampling tabulation is presented in Table 1 . The process was as follows:

Eliminate sectors without family businesses.

Identify the number of family businesses in each remaining sector, according to the JSE Classification Code.

Select the sector with the highest proportion of family businesses and with a comparative portion of non-family businesses, resulting in diversified real estate investment trusts (REITs) representing 35% of all family-owned businesses in the JSE, with a subsequent 15% or less of family-owned business representation.

The sample period and size were selected based on the sampling strategy, to achieve the aim of comparing family and non-family businesses. Limiting factors included the need to identify a comparative number of firms within the same industry.

The REITs sector started in 2013 and, since 2015, is the sector most strongly representative of family firms. The year 2015 was selected as a starting point to include as many family businesses as possible in the analysis, as well as because of the release of the new corporate governance code, King III, which influenced the corporate governance guidelines for listed firms in SA. The end period of 2019 was selected to exclude any bias of the effects of COVID-19 on firms’ performance and existence. A summary of the study variables is presented in Table 2 .

Panel data analysis was utilised, using EVIEWS software, Version 12. Three regression models were estimated: the pooled, fixed effects, and random effects regression models. The final model was selected and interpreted after the appropriate diagnostic tests (a test for redundancy and the Hausman test) had been executed.

The three models differ because pooled effects regression assumes homogeneity between the cross-sections (the firms), whereas the fixed and random effects estimations assume heterogeneity. The slopes of the cross-sections differ between the fixed effect and the random effects model. Generally, the three equations can be specified as indicated in Equations (1)–(3). More specifically, the equation for the two identified measures of financial performance (ROA and Tobin’s Q) with the independent variables are shown in Equations (4) and (5), which will be executed for family and non-family firms. Pooled effects model Y it = α + β X it + u it, (1) Fixed effects model: Y it = α + βX it + µ i + Ʋ it (2) Random effects model: Y it = α + βX it + ε i + Ʋ it (3)

The models employ the dependent and independent variables used in this study: ROA it = α + βOWN it + βSIZ it + βDIV it + βIND it + βCOM it + ε it (4) and QRat it = α + βOWN it + βSIZ it + βDIV it + βIND it + βCOM it + ε it (5) where: i =The cross-sectional element: business 1…15; t =The time element: year 1…5; ROA =Return on assets; QRat =Tobin’s Q; α =The intercept; β =The slope; OWN =The majority shareholder’s ownership concentration; SIZ =The total number of directors constituting the board of directors; DIV =Ratio of female directors on the board of directors (gender diversity); IND =The ratio of independent directors constituting the board of directors; COM =The total compensation accrued to the executive directors; ε =The error term.

4. Results and Discussion

The variance inflation factors presented in Table 3 are all below three, indicating that multicollinearity was not present, which agrees with the study by Vieira ( 2018 ). Additionally, the diagnostic test results in the form of the redundancy test and Hausman test for all models are displayed in Table 4 .

Based on the various diagnostic test results, the random effects family ROA model was the most appropriate for analysis. For the family QRAT model, the fixed effects model was the most appropriate, whereas the random effects model was most appropriate for the non-family ROA model. Then, the fixed effects model was best suited for the non-family QRAT analysis.

Table 5 indicates that for the family ROA model, the OWN, DIV, and SIZ variables are positively significant. The model has an adjusted R 2 of 0.3057, with a probability (F-statistic) of 0.0480, indicating the model’s significance. However, for the non-family ROA model, all variables were found to be insignificant.

Table 6 indicates the family QRAT model, showing insignificant relationships for all variables. The non-family QRAT model indicates a significant negative relationship with SIZ. The adjusted R 2 is 0.5121 and is significant at a 99% confidence level (F-statistic = 0.0012).

Table 6 indicates the family QRAT model showing insignificant relationships for all variables. The non-family QRAT model indicates a significant negative relationship with SIZ. The adjusted R 2 is 0.5121 and is significant at a 99% confidence level (F-statistic = 0.0012).

Table 7 presents a summary of the determinants of financial performance for family and non-family JSE-listed firms in the REIT sector.

From Table 7 , it can be seen that family ownership concentration and the corporate governance characteristics’ relationships with financial performance are best explained using the accounting-based measurement, ROA. The insignificant relationships evident in the family QRAT model suggest that investors do not place a premium on family businesses’ share prices. These results substantiate previous findings in the literature ( Hussain et al. 2019 ) that family businesses with a large presence of family directors exhibit superior profitability using accounting measures but show inferior financial performance when market-based measures are used.

Conversely, the financial performance of non-family firms was best explained using the market-based QRAT measurement. This is notable, indicating that outside investor perception is more prevalent for non-family financial performance.

To summarise, the financial performance of both family and non-family businesses is influenced by board size. In addition, the financial performance of family businesses is significantly affected by family ownership concentration and board gender diversity.

4.1. Family Businesses vs. Non-Family Businesses: Financial Outperformance

The first research objective has been addressed by investigating financial outperformance between family and non-family businesses. In Table 8 , family businesses’ financial outperformance is indicated by higher maximum descriptive statistics values for ROA, family ownership, and executive board compensation. However, the mean difference in ROA was statistically insignificant, indicating the need for further research on outperformance.

The mean differences between family and non-family QRATs were statistically significant ( Table 8 ). Thus, financial outperformance with the market-based measure (QRAT) indicates that non-family businesses outperform family businesses. This finding contrasts with previous findings in the literature ( San Martin-Reyna and Duran-Encalada 2012 ) on developed markets, indicating the novel contribution of this research in emerging markets, and the need for expansion in emerging market research. Non-family businesses had a higher maximum regarding board size and gender diversity (the significant variables from the regression models) than family businesses.

4.2. The Relationship between Family Business Corporate Governance Characteristics and Financial Performance

The second research objective of the relationship between corporate governance characteristics to financial performance for both family and non-family businesses can now be interpreted. The variables that influence family ROA are ownership concentration, board gender diversity, and board size ( Table 4 ), which aligns with the current SA literature, as well as with agency and stewardship theories ( Vieira 2018 ; Willows and van der Linde 2016 ; Lane et al. 2006 ).

Large family ownership concentrations enable the owning family to have control over the family business’s financial and operational policies and practices, which provides the family with the power and incentives to monitor family business managers and enhance financial performance. Board gender diversity is positively related to family ROA because of the supervisory role that female directors play, which aligns with RBV theory. In an emerging African market, SA family businesswomen behave similarly to Moroccan family businesswomen who were found to be resilient, which helped improve business financial performance, even during economic hardship ( Welsh et al. 2018 ). The significant positive relationship between family board size and financial performance, compared to the negative relationship with non-family board size, suggests that not all members of the non-family board are invested in considering the best interests of the business, and a larger board size cannot necessarily be considered to serve the greater good of the company. Therefore, this finding suggests that lessons can be learned from family firms with a smaller board size.

Of interest from a South African and emerging market perspective is the insignificant impact of board independence on ROA and QRAT, as this conflicts with the prescription of King Code IV, which promotes the inclusion of more independent non-executive directors on corporate boards of directors for enhanced monitoring. Theoretically, these findings align with the stewardship theory ( Finkelstein and Hambrick 1996 ), indicating that independent non-executive directors need to be more knowledgeable about the businesses and the complexities of the boards on which they serve, and this renders their roles ineffective. The findings regarding the insignificant impact of board independence on family business financial performance also align with the agency theory, which states that the aligned interests of unitary family business owners and managers render the role of independent directors ineffective ( Davis et al. 1997 ).

Family business executive board compensation practices had an insignificant relationship with financial performance. In line with the previous literature ( Vieira 2018 ; San Martin-Reyna and Duran-Encalada 2012 ) on the impact of family business ownership concentration and corporate governance characteristics on company performance, there was no statistical significance between market-based family business financial performance and corporate governance. It appears that JSE investors do not place premiums on family business share prices.

4.3. The Relationship between Non-Family Business Corporate Governance Characteristics and Financial Performance

The variable that influences non-family QRAT is board size, whereas ownership concentration, board diversity, board independence, and executive board compensation are insignificant; these findings support the previous literature ( Vieira 2018 ; Tshipa et al. 2018 ; Muchemwa et al. 2016 ; Pamburai et al. 2015 ). Interestingly, board size had a significantly negative relationship with non-family performance. This finding, which is in line with stewardship theory, suggests that a smaller board of directors could improve financial performance. Importantly, this relationship is the opposite for family businesses, where size is positively significant. These conflicting results suggest that the optimal board size could lie between the board sizes of family businesses and non-family businesses of eight to ten board members, as indicated by the mean values of the descriptive statistics in Table 5 .

The presence of female directors on the boards of the non-family sub-sample was insignificant. The same applied to ownership concentration, which had a mean value of the majority shareholding percentage of 19% versus 41% for controlling family shareholders ( Table 5 ). The 19% value falls below the minimum shareholding percentage prescribed by IFRS, which significantly influences business financial performance. These findings strengthen the argument made in previous studies that a majority shareholder needs to hold a substantial share of the business to impact its financial performance ( San Martin-Reyna and Duran-Encalada 2012 ).

Board independence is insignificant when explaining variations in non-family QRAT, as well as in family businesses’ ROA. This result for both ownership structures proposes that the independent directors are not selected based on their expertise and experience but for compliance and other reasons, as reported by Pamburai et al. ( 2015 ).

Compensation practices for both ownership structures were aligned, with the mean difference between family and non-family compensation practices being insignificant ( Table 5 ), as seen in the respective regression models in Table 2 and Table 3 . This finding supports the previous literature ( Vieira 2018 ; Muchemwa et al. 2016 ; Pamburai et al. 2015 ), finding no statistical significance between accounting-based non-family financial performance measures and corporate governance.

The findings of this study support the notion that family business and non-family business research must be viewed through different theoretical lenses. The importance of the results of this study motivates the theoretical lens to expand to include three theories specifically tailored to family business financial performance and corporate governance research.

The ownership structure of a business motivates a confluence of the agency theory, stewardship theory, and RBV. Agency costs are reduced in a family business, due to alignment between family business owners and managers, implying that family ownership is good for the family business ( Table 4 and Table 6 ). Additionally, managerial ownership in family businesses positively affects a business’s financial performance, as it naturally aligns the interests of both owners and managers ( Zellweger and Kammerlander 2015 ; Jensen and Meckling 1976 ). This study supports the RBV and stewardship theories, contending that family business owners and managers are pro-organisational and resourceful, thereby not departing from the best interest of the business. The confluence of skills and individual family members, when combined within the family unit, leads to synchronised control of the family business, which is associated with sustained financial performance ( Habbershon and Williams 1999 ).

The reported significance of family business board gender diversity argues for the inclusion of more female board members, which supports the RBV, to gain a financial performance advantage. Family board sizes are smaller than those of non-family businesses, allowing the dominant shareholder to steer the business in a cohesive manner; also, a smaller board has fewer control costs for family business managers, thereby increasing financial performance. The insignificance of family business board independence can be viewed through the agency and stewardship theory lens. Given the interest alignment of family business shareholders and managers, independent directors do not have a substantial impact on financial performance in family businesses where the owning family is dominant ( Hussain et al. 2019 ).

No one theory can be used to view and interpret the findings for the family financial performance indicators. The different ownership structures revealed different implications regarding the basis of the three theories and cannot be ignored. Therefore, all three theories (agency, stewardship, and RBV) are needed to expand on family business research.

The researchers recommend that family businesses should maintain family control and pay specific attention to board size and gender diversity to reap financial performance advantages. According to the theoretical findings, family businesses benefit from the alignment of personal and business interests, coupled with reduced control costs, because family business managers display the cohesiveness that comes with the familiness of family businesses.

Non-family businesses should pay specific attention to board size going forward to reap financial performance advantages, keeping in mind special considerations for new appointments. Surprisingly, board independence was found to be insignificant in relation to financial performance. Again, this indicates that businesses should carefully consider their selection of independent board members, focusing on members who can better aid the business in enhancing its financial performance.

The conflicting significant findings regarding board size between the two ownership structures are novel and indicate important considerations for policymakers. Additionally, the maximum non-family board size was higher than the maximum family board size. However, the relationship between non-family board size and financial performance was negative, whereas the relationship between family board size and financial performance was positive. This finding is important for current policymakers within SA when reviewing current policies.

5. Conclusions

This study aims to determine the relationship between ownership concentration and corporate governance characteristics regarding the financial performance of listed family and non-family businesses. Based on the above sampling strategy, the property sector of the JSE in SA was identified. This study contributes by investigating the corporate governance determinants of financial performance in South African family and non-family businesses within an emerging economy context and by applying RBV to existing theories of agency and stewardship theories. This theoretical contribution indicates that family businesses should incorporate the principles of the RBV, along with agency and stewardship theories, thereby applying a multi-theoretical framework. These three theories are the most suitable for family business studies, highlighting the need to distinguish between family and non-family business research.

To the best of the authors’ knowledge, this study is the first of its kind conducted in the emerging market of South Africa, to investigate the relationship of this combination of corporate governance characteristics with financial performance. The specific focus on family businesses’ versus non-family businesses’ financial performance and the significant corporate governance characteristics that were identified lay the foundation for further research in this area.

Additionally, ownership concentration, board size, and board diversity were significant in explaining the variations in the ROA of family businesses, whereas for non-family businesses, only board size was found to be significant when explaining the variations in Tobin’s Q. Interestingly, board size was the only common corporate governance characteristic affecting both family and non-family business financial performance. However, a conflicting relationship with financial performance was found. This finding presents the novel notion that it is possible that non-family businesses can learn from family businesses’ board sizes to enhance their financial performance.

The results of this study have important implications for South African family and non-family businesses. Theoretically speaking, the study reconfigured family business corporate governance through agency, stewardship, and resource-based view theories. The study also highlighted that strengthening investor confidence through effective corporate governance practices and configurations will increase long-term corporate competitiveness and benefit the country’s economic health. Additionally, implementing sound corporate governance standards and practices in an emerging economy may assist in encouraging investment within the country. Corporate boards can capitalise on significant corporate governance variables to enhance monitoring and control, thereby impacting financial performance and shareholder wealth. However, careful consideration should be given to the number of board members, as well as to the selection of independent board members.

The study sample was limited to the JSE REIT sector. The sample size did not make it possible to conduct industry or sector analyses. However, this study is the first of its kind and it should be used to build and expand on family business research.

This study was industry-specific and covered a topic that currently lacks coverage in the South African literature. Further research is recommended to expand the following areas of study:

The optimum board size should be explored since this study found mixed results between the various ownership structures.

Similar studies across other sectors of the JSE should be conducted to determine the generalisability of the results.

Additional corporate governance variables should be incorporated to determine the best combination of corporate governance variables.

Author Contributions

Conceptualization, A.M.; methodology, A.M.; software, A.M.; validation, M.M. and L.P.; formal analysis, A.M.; investigation, A.M.; resources, A.M., M.M. and L.P.; data curation, A.M.; writing—original draft preparation, A.M., M.M. and L.P.; writing—review and editing, A.M., M.M. and L.P.; visualization, A.M., M.M. and L.P.; supervision, M.M. and L.P.; project administration, A.M., M.M. and L.P.; funding acquisition, None. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Data Availability Statement

Due to ethical reasons data will be supplied upon request.

Conflicts of Interest

The authors declare no conflict of interest.