Behavioral Modeling and Emotional Social Wealth and Mixed Opinions

Mahdi Aliyari

doi:10.63053/ijmea.56

Authors

Mahdi Aliyari .Management Department, Business Management major, Islamic Azad University, Central ‎Tehran Branch, Iran

DOI:

https://doi.org/10.63053/ijmea.56

Keywords:

Behavioral Modeling - Social Modeling - Family-Owned Companies

Abstract

Examining the behavior of family-owned companies can provide valuable information to financial information users. Unfortunately, in Iran, there has not yet been a suitable index for identifying such companies. A notable feature of this research is the provision of an index tailored to the conditions of the country's capital market by utilizing past studies and expert opinions to identify and introduce family-owned companies in the stock market. The significance of the presence of family-owned companies is such that after conducted studies, it was found that out of the companies listed on the stock exchange in the year 1402 (2023), 38 companies, nearly 11%, were family-owned. Descriptive statistical analysis of the research indicates that the highest amount of discretionary accruals in the year 1402 occurred when the stock market experienced abnormal fluctuations.

After reviewing the reports of the boards of directors to the General Assemblies of all listed companies during this period, a total of 38 companies were selected in the initial sampling. Following further investigation and due to insufficient disclosures and the lack of necessary information regarding some companies, ultimately 31 companies were identified and selected as family-owned, with the same number of non-family companies from the same industries chosen for comparison. According to the results, conflicts negatively impact the alignment of the company name and the individual evaluation of family-owned companies.

References

• Ahlers, O., Hack, A., Kellermanns, F. W., & Wright, M. (2017). Is it all about money? Affective commitment and the difference between family and non-family sellers in buyouts. British Journal of Management, 28, 159-179.

• Albert, S., & Whetten, D. A. (1985). Organizational identity. In L. L. Cummings & B. M. Staw (Eds.), Research in organizational behavior (Vol. 7, pp. 263-295). Greenwich, CT: JAI Press.

• Amason, A. C. (1996). Distinguishing the effects of functional and dysfunctional conflict on strategic decision making: Resolving a paradox for top management teams. Academy of Management Journal, 39, 123-148.

• Amini, Mokhtar (2014). "Comparison of the Impact of Family and Non-Family Ownership Structure and Operational Risk on Company Performance." Master's thesis, Faculty of Management and Accounting, Qazvin Islamic Azad University.

• Anderson, R., & Reeb, D. (2003). Founding-family ownership and firm performance: Evidence from S&P 500. Journal of Finance, 58, 1301-1327.

• Arkes, H. R., & Blumer, C. (1985). The psychology of sunk costs. Organizational Behavior and Human Decision Processes, 35, 124-140.

• Astrachan, J., & Jaskiewicz, P. (2008). Emotional returns and emotional costs in privately-held family businesses: Advancing traditional business valuation. Family Business Review, 21, 139-150.

• Barki, H., & Hartwick, J. (2004). Conceptualizing the construct of interpersonal conflict. International Journal of Conflict Management, 15, 216-244.

• Baum, C. F., Schaffer, M. E., & Stillman, S. (2002). IVENDOG: Stata module to calculate Durbin-Wu-Hausman endogeneity test after ivreg. Retrieved from https://ideas.repec. org/c/boc/bocode/s429401.html

• Beehr, T. A., Drexler, J. A., Jr., & Faulkner, S. (1997). Working in small family businesses: Empirical comparisons to non-family businesses. Journal of Organizational Behavior, 18, 297-312.

• Berrone, P., Cruz, C., & Gómez-Mejía, L. R. (2012). Socioemotional wealth in family firms: Theoretical dimensions, assessment approaches, and agenda for future research. Family Business Review, 25, 258-279.

• Berrone, P., Cruz, C. C., Gómez-Mejía, L. R., & Larraza Kintana, M. (2010). Socioemotional wealth and corporate response to institutional pressures: Do family-controlled firms pollute less? Administrative Science Quarterly, 55, 82-113.

• Bodtker, A. M., & Jameson, J. K. (2001). Emotion in conflict formation and its transformation: Application to organizational conflict management. International Journal of Conflict Management, 12, 259-275.

• Bono, J. E., & McNamara, G. (2011). From the editors: Publishing in AMJ—part 2: Research design. Academy of Management Journal, 54, 657-660.

• Boyce, R. R., Brown, T. C., McClelland, G. H., Peterson, G. L., & Schulze, W. D. (1992). An experimental examination of ntrinsic values as a source of the WTA-WTP disparity. American Economic Review, 82, 1366-1373.

• Bromiley, P. (2010). Looking at prospect theory. Strategic Management Journal, 31, 1357-1370.

• Cabrera-Suárez, K., Deniz-Deniz, d. L. C., & Martin-Santana, J. D. (2014). The setting of non-financial goals in the family firm: The influence of family climate and identification. Journal of Family Business Strategy, 5, 289-299.

• Campopiano, G., De Massis, A., & Chirico, F. (2014). Firm philanthropy in small- and medium-sized family firms: The effects of family involvement in ownership and management. Family Business Review, 27, 244-258.

• Capron, L., & Shen, J.-C. (2007). Acquisitions of private vs. public firms: Private information, target selection, and acquirer returns. Strategic Management Journal, 28,

• 891-911.

• Carmon, Z., & Ariely, D. (2000). Focusing on the forgone: How value can appear so different to buyers and sellers. Journal of Consumer Research, 27, 360-370.

• Casson, M. (1999). The economics of the family firm. Scandinavian Economics History Review, 47(1), 10-23.

• Chrisman, J. J., Chua, J. H., & Litz, R. (2004). Comparing the agency costs of family and non-family firms: Conceptual issues and exploratory evidence. Entrepreneurship Theory and Practice, 28, 335-354.

• Chrisman, J. J., & Patel, P. J. (2012). Variations in R&D investments of family and non-family firms: Behavioral agency and myopic loss aversion perspectives. Academy of Management Journal, 55, 976-997.

• Chua, J. H., Chrisman, J. J., & De Massis, A. (2015). A closer look at socioemotional wealth: Its flows, stocks, and prospects for moving forward. Entrepreneurship Theory and Practice, 39, 173-182.

• Chua, J. H., Chrisman, J. J., Steier, L. P., & Rau, S. B. (2012). Sources of heterogeneity in family firms: An introduction Entrepreneurship Theory and Practice, 36, 1103-1113.

• Cohen, J., Cohen, P., West, S., & Aiken, L. (2003). Applied multiple regression/correlation analysis for the behavioral sciences (3rd ed.). Mahwah, NJ: Lawrence Erlbaum.

• Copeland, T., Koller, T., & Murrin, J. 2000. Valuation: Measuring and managing the value of companies. New York, NY: Wiley.

• Cruz, C. C., Gómez-Mejía, L. R., & Becerra, M. (2010). Perceptions of benevolence and the design of agency contracts: CEO-TMT relationships in family firms. Academy of Management Journal, 53, 69-89.

• Curasi, C. F., Price, L. L., & Arnould, E. J. (2004). How individuals’ cherished possessions become families’ inalienable wealth. Journal of Consumer Research, 31, 609-622.

• Danes, S. M., Zuiker, V., Kean, R., & Arbuthnot, J. (1999). Predictors of family business tension and goal achievement. Family Business Review, 12, 241-252

• Ghods-Nafari, Mehdi Ibn Al-Rasul Seyed, Asghar, Nojavan Majid (2004). "Comparison of Performance Measurement Systems and Selection of the Best Using the Fuzzy TOPSIS Method." International Journal of Engineering Sciences, No. 15, Vol. 15, pp. 105-125.

• Gómez-Mejía, L. R., Makri, M., & Larraza-Kintana, M. (2010). Diversification decisions in family-controlled firms. Journal of Management Studies, 47, 223-252.

• Gómez-Mejía, L. R., Patel, P. C., & Zellweger, T. M. (2018). In the horns of the dilemma: Socioemotional wealth, financial wealth, and acquisitions in family firms. Journal of Management, 2018, 1369-1397.

• Gómez-Mejía, L. R., Tochman Campbell, J., Martin, G., Hoskisson, R. E., Makri, M., & Sirmon, D. G. (2014). Socioemotional wealth as a mixed gamble: Revisiting family firm R&D investments with the behavioral agency theory. Entrepreneurship and Theory and Practice, 38, 1351-1374.

• Gordon, G., & Nicholson, N. (2008). Family wars: Classic conflicts in family business and how to deal with them. London, England: Kogan Page.

• Grant, P. (2017, May 16). Real-estate empire survives brutal family battle. The Wall Street Journal. Retrieved from https://www.wsj.com/articles/real-estate-empire-survives-brutal-family-battle-1494932405

• Gutiérrez, M., & Tribó, J. A. (2004). Private benefit extraction in closely-held corporations: The case for multiple large shareholders. Working Paper 04-43, Business Economics Series 15.

• Hair, J. F., Black, B., Babin, B., & Anderson, R. E. (2010). Multivariate data analysis (6th ed.). Upper Saddle River, NJ: Prentice Hall.

• Hamilton, B. H., & Nickerson, J. A. (2003). Correcting for endogeneity in strategic management research. Strategic Organization, 1, 51-78.

• Handler, W. C. (1990). Succession in owner-managed and family firms: A mutual role adjustment between entrepreneur and the next generation. Entrepreneurship Theory and Practice, 15, 37-51.

• Hoshi, Abbas, Ali Khani, Hamid (2015). "Examining the Relationship between Family Ownership and Non-Family Ownership on Company Performance in the Tehran Stock Exchange." Journal of Accounting and Auditing Research, No. 25, Vol. 7, pp. 28-41.

• Kotlar, J., & De Massis, A. (2013). Goal setting in family firms: Goal diversity, social interactions, and collective commitment to family-centered goals. Entrepreneurship Theory and Practice, 37, 1263-1288.

• Kotlar, J., Signori, A., De Massis, A., & Vismara, S. (2018). Financial wealth, socioemotional wealth and IPO underpricing in family firms: A two-stage gamble model. Academy of Management Journal. Advance online publication. doi:10.5465/amj.2016.0256

• Kumar, N., Stern, L. W., & Anderson, J. C. 1993. Conducting interorganizational research using key in-formants. Academy of Management Journal, 36, 1633-1651.

• Lazarus, R. S. (1991). Emotion and adaptation. New York, NY: Oxford University Press.

• Le Breton-Miller, I., Miller, D., & Steier, L. P. (2004).

• Toward an integrative model of effective FOB succession. Entrepreneurship Theory and Practice, 28, 305-329.

• Leitterstorf, M. P., & Rau, S. B. (2014). Socioemotional wealth and IPO underpricing of family firms. Strategic Management Journal, 35, 751-760.

• Lerner, J. S., & Keltner, D. (2000). Beyond valence: Toward a model of emotion-specific influences on judgment and choice. Cognition & Emotion, 14, 473-493.

• Lerner, J. S., Small, D. A., & Loewenstein, G. (2004). Heart strings and purse strings: Carryover effects of emotions on economic decisions. Psychological Science, 15, 337-341.

• Ling, Y., & Kellermanns, F. (2010). The effects of family firm specific sources of TMT diversity: The moderating role of information exchange frequency. Journal of Management Studies, 47, 322-344.

• Loewenstein, G., & Lerner, J. S. (2003). The role of affect in decision making. In R. Davidson, H. Goldsmith, & K. Scherer (Eds.), Handbook of affective science (pp. 619- 642). Oxford, England: Oxford University Press.

• Love, L. G., Priem, R. L., & Lumpkin, G. T. (2002). Explicitly articulated strategy and firm performance under alternative levels of centralization. Journal of Management, 28, 611-627.

• Lubatkin, M. H., Schulze, W. S., Ling, Y., & Dino, R. N. (2005). The effects of parental altruism on the governance of family-managed firms. Journal of Organizational Behavior, 26, 313-330.

• Martin, G., & Gómez-Mejía, L. R. (2016). The relationship between socioemotional and financial wealth re-visiting family firm decision making. Management Research, 14, 215-233.

• Martin, G. P., Gomez-Mejia, L. R., & Wiseman, R. M. (2013). Executive stock options as mixed gambles: Revisiting the behavioral agency model. Academy of Management Journal, 56, 451-472.

• Mazen, A. M. M., Hemmasi, M., & Lewis, M. F. (1987). Assessment of strategic power in contemporary strategy research. Strategic Management Journal, 8, 403-410

• Mehrgan, Mohammad Reza (2008). "Quantitative Models in Organizational Performance Evaluation (Data Envelopment Analysis)." Tehran Management School Publications.

• Mehrgan, Mohammad Reza (2009). "A Coherent BSC-TOPSIS Approach for Evaluating Top Management Schools of Universities in Tehran Province." Industrial Management Journal, No. 2, Vol. 1, pp. 153-168.

• Namazi, Mohammad, Kermani, Ehsan (2008). "Investigating the Impact of Ownership on Company Performance." Journal of Accounting and Auditing Reviews, No. 53, Vol. 15, pp. 82-100.

• Namazi, Mohammad, Mohammadi Mohammad (2010). "Investigating the Quality of Earnings and Returns of Family and Non-Family Companies Listed on the Tehran Stock Exchange." Advances in Accounting, No. 2, Vol. 2, pp. 159-194.

• Rezaei, Farzin, Zarai Zahra (2015). "The Relationship Between Family and Non-Family ‎Ownership Structure and Earnings Management, Along with Emphasis on Agency Costs." ‎Proceedings of the International Conference on Accounting and Management in the Third ‎Millennium, Rasht, January, pp. 19‎‏.‏

• Rezaei, Farzin, Shiruyi, Maryam (2015). "The Impact of Family Ownership Structure and ‎Transactions with Related Parties (Goods Trade) on the Quality of Earnings of Companies," ‎Conference on Management and Human Resources, Dubai, December, pp. 14-1‎‏.‏

• Sharma, P., & Manikutty, S. (2005). Strategic divestment in family firms: Role of family structure and community culture. Entrepreneurship Theory and Practice, 20, 293-312.

• Shepherd, D. A., & Zacharakis, A. 2000. Structuring family business succession: An analysis of the future leader’s decision making. Entrepreneurship Theory and Practice, 24, 25-39.

• Simons, T. L., & Peterson, R. S. (2000). Task conflict and relationship conflict in top management teams: The pivotal role of intragroup trust. Journal of Applied Psychology, 85 102-111.

• Sorenson, R. L. (1999). Conflict management strategies used in successful family businesses. Family Business Review, 12, 325-339.

• Stanley, L. J., Kellermanns, F. W., & Zellweger, T. (2017). Latent profile analysis: Understanding family firm profiles. Family Business Review, 30, 84-102.

• Sundaramurthy, C., & Kreiner, G. E. (2008). Governing by managing identity boundaries: The case of family businesses. Entrepreneurship Theory and Practice, 32, 415-436.

• Tabachnick, B. G., & Fidell, L. S. (1996). Using multivariate statistics (3rd. ed.). New York, NY: HarperCollins.

• Thaler, R. (1980). Toward a positive theory of consumer choice. Journal of Economic Behavior & Organization, 1(1), 39-60.

• Thomas, K. W. (1992). Conflict and conflict management: Reflections and update. Journal of Organizational Behavior, 13, 265-274.

• Thomsen, S., & Pedersen, T. (2000). Ownership structure and economic performance in the largest European companies. Strategic Management Journal, 21, 689-705.

• Tversky, A., & Kahneman, D. (1991). Loss aversion in riskless choice: A reference-dependent model. Quarterly Journal of Economics, 107, 1039-1061.

• Villalonga, B., & Amit, R. (2006). How do family ownership, control and management affect firm value? Journal of Financial Economics, 80, 385-417.

• Westhead, P., & Cowling, M. (1998). Family firm research: The need for a methodological rethink. Entrepreneurship Theory and Practice, 23, 31-56.

• Westhead, P., & Howorth, C. (2007). “Types” of private family firm: An exploratory conceptual and empirical analysis. Entrepreneurship and Regional Development, 19, 405-431.

• Wiseman, R. M., & Gómez-Mejía, L. R. (1998). A behavioral agency model of managerial risk taking. Academy of Management Review, 23, 133-153.

• Yang, J., & Mossholder, K. W. (2004). Decoupling task and relationship conflict: The role of intragroup emotional processing. Journal of Organizational Behavior, 25, 589-605.

• Zellweger, T., & Astrachan, J. (2008). On the emotional value of owning a firm. Family Business Review, 21, 347-363.