Corporate governance in founders’ controlled companies

Abstract

Ownership structure with the reference to the comparative studies worldwide, types, forms and patterns identified in companies as well as the logic behind the behavior of different owners constitutes an important theme in management studies. Research reveals the crucial importance of the ownership patterns with the reference to the shareholder identity and concentration of shares for the standards of corporate governance including control and monitoring mechanisms, transparency, board work. Corporate governance literature indicates that certain shareholder types may have impact on the adoption of pyramidal structures, dual class shares, board independence, structure of executive compensation and disclosure. This paper focuses on the specific type of listed companies which remain under the control of the founder. The goal of the paper is to identify the corporate governance mechanisms adopted by founders in listed companies with respect to the way they exert control. It investigates whether founders tend to increase the control over companies via use of ownership mechanisms adopting dual class shares and pyramidal structures and via dominating the board lowering the number of independent directors. Using the hand collected data of a sample of 100 companies listed on the Warsaw Stock Exchange the paper addresses the gap in the literature of the unique form of ownership characterized by the control of the founders (first generation) who need to confront the entrepreneurial spirit and significant dominance in management and governance in the company with the features of listed companies in which ownership and control is shared among investors.