Owner-management, board governance and responses to performance feedback in private firms

Despite the ubiquity of private firms, questions concerning the influence of owner-management and board governance on strategic decision-making in private firms have received limited attention. To explore these questions, we draw on the performance feedback literature and use longitudinal data from...

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Detalhes bibliográficos
Autores: Neckebrouck, J. (Jeroen)|||/items/082849f8-1c27-4d5a-a538-c95374c86f4a, Schulze, W.S. (William S.)|||/items/b6b330e7-14c7-4ea1-a10d-7c82de688c60
Formato: artículo
Fecha de publicación:2025
País:España
Recursos:Universidad de Navarra
Repositorio:Dadun. Depósito Académico Digital de la Universidad de Navarra
Idioma:inglés
OAI Identifier:oai:dadun.unav.edu:10171/116888
Acesso em linha:https://hdl.handle.net/10171/116888
Access Level:acceso abierto
Palavra-chave:Board governance
Performance feedback
Self-enhancement
Privately held firms
Decision-making
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spelling Owner-management, board governance and responses to performance feedback in private firmsNeckebrouck, J. (Jeroen)|||/items/082849f8-1c27-4d5a-a538-c95374c86f4aSchulze, W.S. (William S.)|||/items/b6b330e7-14c7-4ea1-a10d-7c82de688c60Board governancePerformance feedbackSelf-enhancementPrivately held firmsDecision-makingDespite the ubiquity of private firms, questions concerning the influence of owner-management and board governance on strategic decision-making in private firms have received limited attention. To explore these questions, we draw on the performance feedback literature and use longitudinal data from 27,704 U.K. and 7272 Belgian private firms to examine strategic investment in private firms. We find that board oversight increases the likelihood that firms will adjust investment levels in line with predictions by the Behavioral Theory of the Firm (BTOF), as firms with high board oversight increase investment when performance falls below aspirations and reduce it when performance exceeds aspirations. In contrast, low board oversight is associated with deviations from BTOF predictions, as firms with low board oversight tend to reduce investment when performance is below aspirations but increase it even when performance is well above aspirations. These findings suggest that governed (high oversight) and ungoverned (low oversight) private firms follow different decision making logics; governed firms appear to engage in coalition-based decision-making, while decision-making in ungoverned firms appears to be dominated by owner-managers, whose investment preferences resemble those of risk-averse, undiversified investors. We also find that the relationship between owner-management, performance feedback, and strategic investment is tempered (offset) by board oversight. In sum, our findings indicate boards play a critical role in private firms by promoting collective goals (as identified and enacted by the board) and limiting the influence of owner-manager's personal goals, risk-preferences, and individual economic interests on the firm's response to performance feedback.ElsevierDadun. Depósito Académico Digital Universidad de Navarra20252025-05-2620252025-05-26journal articlehttp://purl.org/coar/resource_type/c_6501info:eu-repo/semantics/articleapplication/pdfhttps://hdl.handle.net/10171/116888reponame:Dadun. Depósito Académico Digital de la Universidad de Navarrainstname:Universidad de NavarraInglésengopen accesshttp://purl.org/coar/access_right/c_abf2info:eu-repo/semantics/openAccessoai:dadun.unav.edu:10171/1168882026-06-21T12:47:57Z
dc.title.none.fl_str_mv Owner-management, board governance and responses to performance feedback in private firms
title Owner-management, board governance and responses to performance feedback in private firms
spellingShingle Owner-management, board governance and responses to performance feedback in private firms
Neckebrouck, J. (Jeroen)|||/items/082849f8-1c27-4d5a-a538-c95374c86f4a
Board governance
Performance feedback
Self-enhancement
Privately held firms
Decision-making
title_short Owner-management, board governance and responses to performance feedback in private firms
title_full Owner-management, board governance and responses to performance feedback in private firms
title_fullStr Owner-management, board governance and responses to performance feedback in private firms
title_full_unstemmed Owner-management, board governance and responses to performance feedback in private firms
title_sort Owner-management, board governance and responses to performance feedback in private firms
dc.creator.none.fl_str_mv Neckebrouck, J. (Jeroen)|||/items/082849f8-1c27-4d5a-a538-c95374c86f4a
Schulze, W.S. (William S.)|||/items/b6b330e7-14c7-4ea1-a10d-7c82de688c60
author Neckebrouck, J. (Jeroen)|||/items/082849f8-1c27-4d5a-a538-c95374c86f4a
author_facet Neckebrouck, J. (Jeroen)|||/items/082849f8-1c27-4d5a-a538-c95374c86f4a
Schulze, W.S. (William S.)|||/items/b6b330e7-14c7-4ea1-a10d-7c82de688c60
author_role author
author2 Schulze, W.S. (William S.)|||/items/b6b330e7-14c7-4ea1-a10d-7c82de688c60
author2_role author
dc.contributor.none.fl_str_mv Dadun. Depósito Académico Digital Universidad de Navarra
dc.subject.none.fl_str_mv Board governance
Performance feedback
Self-enhancement
Privately held firms
Decision-making
topic Board governance
Performance feedback
Self-enhancement
Privately held firms
Decision-making
description Despite the ubiquity of private firms, questions concerning the influence of owner-management and board governance on strategic decision-making in private firms have received limited attention. To explore these questions, we draw on the performance feedback literature and use longitudinal data from 27,704 U.K. and 7272 Belgian private firms to examine strategic investment in private firms. We find that board oversight increases the likelihood that firms will adjust investment levels in line with predictions by the Behavioral Theory of the Firm (BTOF), as firms with high board oversight increase investment when performance falls below aspirations and reduce it when performance exceeds aspirations. In contrast, low board oversight is associated with deviations from BTOF predictions, as firms with low board oversight tend to reduce investment when performance is below aspirations but increase it even when performance is well above aspirations. These findings suggest that governed (high oversight) and ungoverned (low oversight) private firms follow different decision making logics; governed firms appear to engage in coalition-based decision-making, while decision-making in ungoverned firms appears to be dominated by owner-managers, whose investment preferences resemble those of risk-averse, undiversified investors. We also find that the relationship between owner-management, performance feedback, and strategic investment is tempered (offset) by board oversight. In sum, our findings indicate boards play a critical role in private firms by promoting collective goals (as identified and enacted by the board) and limiting the influence of owner-manager's personal goals, risk-preferences, and individual economic interests on the firm's response to performance feedback.
publishDate 2025
dc.date.none.fl_str_mv 2025
2025-05-26
2025
2025-05-26
dc.type.none.fl_str_mv journal article
http://purl.org/coar/resource_type/c_6501
dc.type.openaire.fl_str_mv info:eu-repo/semantics/article
format article
dc.identifier.none.fl_str_mv https://hdl.handle.net/10171/116888
url https://hdl.handle.net/10171/116888
dc.language.none.fl_str_mv Inglés
eng
language_invalid_str_mv Inglés
language eng
dc.rights.none.fl_str_mv open access
http://purl.org/coar/access_right/c_abf2
dc.rights.openaire.fl_str_mv info:eu-repo/semantics/openAccess
rights_invalid_str_mv open access
http://purl.org/coar/access_right/c_abf2
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv Elsevier
publisher.none.fl_str_mv Elsevier
dc.source.none.fl_str_mv reponame:Dadun. Depósito Académico Digital de la Universidad de Navarra
instname:Universidad de Navarra
instname_str Universidad de Navarra
reponame_str Dadun. Depósito Académico Digital de la Universidad de Navarra
collection Dadun. Depósito Académico Digital de la Universidad de Navarra
repository.name.fl_str_mv
repository.mail.fl_str_mv
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