An Integrative View of Corporate Transparency in Family Businesses

Introduction

Corporate transparency has been defined as ‘the availability of firm-specific information to those outside publicly traded firms’ (Bushman et al., 2004, p. 207). Another possible definition is ‘the widespread availability of relevant information on the performance, financial position, investment opportunities, governance, value . . ., and risks of [the] listed entity’ (Fülöp, 2014, p. 228). A more recent definition is ‘the visibility of the company’s internal situation relative to external investors. . . . [I]ts focus is the external investors’ grasp of the nature of the company’ (Wu et al., 2022, p. 2567). These quotations provide just three examples of the plethora of definitions available.

Most authors have emphasised corporate transparency’s importance in terms of supporting corporate governance structures. This transparency ensures that companies can provide shareholders with reliable information about the firm’s worth and activities and motivates managers to maximise company values rather than pursue personal objectives (Bushman et al., 2004; Vaccaro & Madsen, 2009). However, corporate transparency appears to depend on business contexts and, more specifically, on family versus non-family businesses (Borralho et al., 2020b, 2022).

This variability is unsurprising as the literature reveals a strong consensus among scholars about family firms’ singular environments (e.g. Gómez-Mejía et al., 2007; Habbershon & Williams, 1999; Habbershon et al., 2003). For example, owners and managers’ interests are closely aligned in family businesses (Wang, 2006), which combines with these firms’ long-term orientation to create incentives for developing more powerful governance structures (Liu et al., 2016). In addition, the relationships between companies and their stakeholders are closer in family than non-family businesses (Block & Wagner, 2014). These and other distinctive features have inspired researchers to focus on family firms’ transparency (e.g. Borralho et al., 2020a, 2020b, 2022; Chen et al., 2014; Paiva et al., 2019; Zhong et al., 2022).

The present study sought to integrate the knowledge generated thus far by researchers’ increasing interest in the convergence of corporate transparency and family business (e.g. Borralho et al., 2022; Corten et al., 2021; Umans & Corten, 2022; Zhong et al., 2022) for two reasons. First, scholars widely acknowledge the problems created by multiple interpretations of what constitutes transparency (Biondi & Lapsley, 2014; Heald, 2006). Second, the literature on family firms’ transparency practices is spread across quite diverse journals covering multiple fields (e.g. management, business, finance and accounting).

Thus, the current study’s main objectives were to review the main contributions of publications on family businesses’ corporate transparency and to offer an integrative view of the relevant literature’s state of the art. The goal was to generate a fuller understanding of this subject and challenge scholars to conduct research on the ‘black holes’ still left in the available knowledge. That is, the overall objective was to go beyond a simple systematic literature review and integrate different interpretations and ways of analysing corporate transparency in family business contexts in order to identify future lines of research based on the gaps identified and thus stimulate further studies.