Do independent directors’ independence and familiarity enhance family firm performance? The role of corporate governance performance

What the paper says

Purpose Independent directors are responsible for overseeing a company’s strategy and operations. However, if an independent director is too strict in job execution, then corporate oversight may be less effective, because such a director could have less access to relevant information. Therefore, independent directors’ independence and familiarity both might influence firm performance. As a result, this study aims to examine how family firms enhance their performance through the independence and familiarity of independent directors and also considers the impact of corporate governance performance. Design/methodology/approach Using a sample that covers Taiwanese-listed family firms from 2016 to 2023, this study evaluates how family firms heighten their performance through the independence and familiarity of independent directors and examines the impact of corporate governance on performance. Findings The findings indicate that the independence of independent directors has a significantly positive effect on family firm performance, but their familiarity does not have any impact. In addition, good corporate governance performance augments the positive impacts on the independence and familiarity of independent directors. Originality/value The results herein advance the literature related to corporate governance mechanisms, like independent directors, and have significant implications for family firms.