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The Board Value Protection Function in Young, Mature and Family Firms
Author(s) -
Hülsbeck Marcel,
Meoli Michele,
Vismara Silvio
Publication year - 2019
Publication title -
british journal of management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.407
H-Index - 108
eISSN - 1467-8551
pISSN - 1045-3172
DOI - 10.1111/1467-8551.12322
Subject(s) - insider , initial public offering , context (archaeology) , value (mathematics) , business , accounting , function (biology) , german , on board , natural experiment , enterprise value , sample (material) , industrial organization , law , political science , mathematics , history , paleontology , statistics , chemistry , archaeology , engineering , chromatography , evolutionary biology , biology , aerospace engineering
Next to value creation, the value protection function of the Board of Directors is a widely accepted fact. Nevertheless, the current literature struggles to show a positive impact of the Board Value Protection (BVP) on firm performance. We use the decision rights model of board functions and argue the difference between board member roles (insider vs independent) and functions, to isolate the BVP from other director functions. By using the German context as a natural setting, we can isolate the BVP and show how it evolves with the firm lifecycle and owner motivations. Based on a sample of 446 initial public offerings (IPOs) from 1995 to 2015, our results show that the importance of BVP in young firms decreases with age, increases in mature firms and that this effect is stronger in family firms.